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BUSINESS ETHICS PROJECT-VI

Submitted in Partial Fulfillment for the Award of the Degree of


BCA 2022-2023

TUSHAR YADAV

2028100314

BHARATI VIDYAPEETH (DEEMED TO BE


UNIVERSITY) CENTER FOR DISTANCE AND
ONLINE EDUCATION Academic Study Center -
BVIMR,New Delhi An ISO 9001:2008 Certified Institute
NAAC Accredited Grade “A” University
ASSIGNMENT
Submitted in Partial Fulfillment for the Award of the Degree of
BCA 2022-2023

BHARATI VIDYAPEETH (DEEMED TO BE UNIVERSITY) CENTER


FOR DISTANCE AND ONLINE EDUCATION Academic Study
Center - BVIMR,
New Delhi An ISO 9001:2008 Certified Institute NAAC
Accredited Grade “A” University
CONTENTS

1. INTRODUCTION
2. PROFESSIONAL ETHICS
3. CYBER CRIMES
4. CORPORATE GOVERNANCE
Introduction
What is ethics?
Ethics is a system of moral principles. They affect how people make decisions and lead their
lives.
Ethics is concerned with what is good for individuals and society and is also described as moral
philosophy.
The term is derived from the Greek word ethos which can mean custom, habit, character or
disposition.
Ethics covers the following dilemmas:
 How to live a good life

 Our rights and responsibilities

 The language of right and wrong

 Moral decisions - what is good and bad?

Our concepts of ethics have been derived from religions, philosophies and cultures. They infuse
debates on topics like abortion, human rights and professional conduct.
Ethics is about the 'other' At the heart of ethics concern about something or someone
other than ourselves and our own desires and self-interest.
Ethics is concerned with other people's interests,
with the interests of society, with God's interests,
with "ultimate goods", and so on.
So when a person 'thinks ethically' they are
giving at least some thought to something
beyond themselves.

Levels of Business Ethics:

Macro Level

At a macro level, sometimes called the systemic level, ethics are defined and influenced by the
wider operating environment in which the company exists. Factors such as political pressures,
economic conditions, societal attitudes to certain businesses, and even business regulation can
influence a company's operating standards and policies. Business owners and managers must be
aware of how these pressures affect operations and relationships, and how they may impact on
markets locally, nationally and internationally.

Company Level

At a company or corporate level, ethical standards are embedded in the policies and procedures
of the organization, and form an important foundation on which business strategy is built. These
policies derive from the influences felt at macro level and therefore help a business to respond to
changing pressures in the most effective way. There can be a gap between the company policy
on ethical standards and the conduct of those in charge of running the business, especially if
they are not the direct owners, which can present an ethical challenge for some employees.

Individual Level

Since businesses are run by people, the ethical standards of individuals in the business are an
important consideration. Individuals may well have a very different set of ethical standards from
their employer and this can lead to tensions. Factors such as peer pressure, personal financial
position, and sociology-economic status all may influence individual ethical standards.
Managers and business owners should be aware of this to manage potential conflicts.

Integrated Approach

Ethical standards flow through the entire structure of a business organization, shaping how it
plans its strategy, deals with customers, and manages its workforce. The standards have a reach
far beyond day-to-day operations, and should be considered in all aspects of a business, from the
boardroom to the shop floor and across all functional areas. Supporting this effort, businesses
that genuinely understand the value and importance of ethics have appropriate metrics in place
to measure achievement and identify problems before they become major issues.
Myths about Business Ethics:

§ Know the Principles

In ethical decision making there are three basic principles that can be used for resolution of
problem. These three principles are that of intuition ism, moral idealism and utilitarianism.
The principle of intuition works on the assumption that the HR person or the manager is
competent enough to understand the seriousness of the situation and act accordingly, such that
the final decision does not bring any harm to any person involved directly or indirectly.
The principle of moral idealism on the other hand states that there is a clear distinction between
good and bad, between what is acceptable and what is not and that the same is true for all
situations. It therefore asks to abide by the rule of law without any exception.
Utilitarianism concerns itself with the results or the implications. There is no clear distinction
between what is good and what is bad; the focus is on the situation and the outcome. What may
be acceptable in a certain situation can be unacceptable at some other place. It underlines that if
the net result of the decision is an increase in the happiness of the organization, the decision is
the right one.

1. Debate Moral Choices

Before taking a decision, moral decisions need to be thought upon and not just accepted blindly.
It is a good idea to make hypothetical situations, develop case studies and then engage others in
brainstorming upon the same. This throws some light into the unknown aspects and widens the
horizon of understanding and rational decision making.
2. Balance Sheet Approach

In balance sheet approach, the manager writes down the pros and cons of the decision.
This helps arrive at a clear picture of things and by organizing things in a better way

3. Engage People Up and Down the Hierarchy

One good practice is to announce ones stand on various ethical issues loudly such that a clear
message to every member of the organization and to those who are at the greater risk of falling
prey to unethical practices. This will prevent the employees from resorting to unethical means.

4. Integrating Ethical Decision Making into Strategic


Management

Morality and ethical make up for a perennial debate and ethical perfection is almost impossible.
A better way to deal with this is to integrate ethical decision making into strategic management
of the organization. The way the HR manager gains an alternate perspective rather than the
traditional employee oriented or stakeholder oriented view.

Can Business Ethics be Taught and Trained?

The issue is an old one. Almost 2500 years ago, the philosopher Socrates debated the question
with his fellow Athenians. Socrates' position was clear: Ethics consists of knowing what we
ought to do, and such knowledge can be taught.

 Dramatic changes occur in young adults in their 20s and 30s in terms of the basic
problem-solving strategies they use to deal with ethical issues.
 These changes are linked to fundamental changes in how a person perceives society and
his or her role in society.
 The extent to which change occurs is associated with the number of years of formal
education (college or professional school)

 Deliberate educational attempts (formal curriculum) to influence awareness of moral


problems and to influence the reasoning or judgment process have been demonstrated to be
effective.
 Studies indicate that a person's behavior is influenced by his or her moral perception and
moral judgments.

Can Business Ethics Be Taught?

Recent surveys indicate that most Fortune 500 corporations have developed written codes of
ethical business conduct and training programs to communicate those standards to their
employees. If ethics cannot truly be "learned" in significant ways by adults, then the value of
corporate ethics training programs would indeed be suspect.
Moral Capacities

Almost every human being is born with capacities for sympathy, fellow-feeling, concern about
the well-being of others. The proper development of these capacities is not automatic, but the
vast majority of us have developed them because we've been raised in loving families and made
stable friendships at an early age. Every so often, of course, we get a jarring glimpse of someone
who never had the requisite nurturing, an adult who is relatively intelligent but who somehow
never learned how to be compassionate.

Ethical Reasoning and Imagination

But applying basic ethical principles like fairness in the workplace isn't always easy. Our
consciences can have all of the standard equipment, and yet collectively we may not intuit
identical resolutions to specific ethical questions:
 Where should you draw the line between a legitimate business courtesy and a bribe?
 How do you hold to exemplary ethical standards when your competitor fights dirty?
 How do you conduct a layoff in the fairest possible manner?
Deliberation and Discussion

Perhaps most importantly, a corporate ethics program can simply make ethics an acceptable
subject of discussion on the job. Most employees want to work for a company where they don't
feel they're being asked to abandon their core values in order to succeed in their jobs. Yet unless
they're given formal opportunities and encouragement from management to discuss ethics,
they're likely to be silenced by the few cynics among them who think that ethics is for "wimps"
or is irrelevant to the bottom line narrowly conceived. Employees need to hear from
management that the company depends on their individual integrity to maintain its good name,
and is willing to hear their ethical concerns on an ongoing basis.

Managing to Reinforce Ethical Conduct

Finally, corporate ethics initiatives must go well beyond written codes and employee
workshops. The ethics that are taught in formal settings can be easily undermined in other ways.
Employees pay very close attention to the subtle (and not-so-subtle) cues given off by their
supervisors in day-to-day interactions. Why should employees believe that management is
serious about ethical risks if their bosses either don't listen to their concerns or shoot the
messengers of unpleasant news? What sense will it make to preach fairness if promotions and
compensation are in fact based on who you know rather than individual merit and performance?
What message is sent when management allows a salesman to pad his expense account because
he's a top performer?
In other words, managers and employees must regularly make the effort to examine the goals,
incentives, pressures, and styles of communication that drive behavior in the organization, and
ask themselves, Are these factors reinforcing or undermining the ethical standards we want to
uphold?
Lawrence Kohl berg's stages of moral development:
Kohl berg's six stages can be more generally grouped into three levels of two stages each:
conventionalize, conventional and post-conventional. Following Piaget's constructionist
requirements for a stage model, as described in his theory of cognitive development .

Level 1 (Pr-Conventional)

 Obedience and punishment orientation


(How can I avoid punishment?)
 Self-interest orientation
(What's in it for me?)
(Paying for a benefit)
Level 2 (Conventional)
 Interpersonal accord and conformity
(Social norms)
(The good boy/girl attitude)
 Authority and social-order maintaining orientation
(Law and order morality) Level 3 (Post-Conventional)
 Social contract orientation
 Universal ethical principles

Carol Gilligan’s Theory:

A community of moles gives shelter to a homeless porcupine. The moles, however, are
constantly stabbed by the porcupine's quills. What should they do? This scenario was used to
aid in the development of a theory that argued women and men may have differing paths to
moral development. This lesson will introduce and apply that theory, developed by Carol
Gilligan.
The field of moral development encompasses prosocial behavior, such as altruism, caring and
helping, along with traits such as honesty, fairness, and respect. Many theories of moral
development have been proposed, but this lesson will focus on the specific theory proposed by
Psychologist Carol Gilligan.
Gilligan was a student of Developmental Psychologist Lawrence Kohl berg, who introduced
the theory of stages of moral development. Gilligan, however, felt as though her mentor's theory
did not adequately address the gender differences of moral development due to the fact that
participants in Kohl berg's study were predominately male and because his theory did not
include the caring perspective.

Carol Gilligan felt that Lawrence Kohl berg did not address gender differences in moral development

Gilligan argued that males and females are often socialized differently, and females are more apt
than males to stress interpersonal relationships and take responsibility for the well-being of
others. Gilligan suggested this difference is due to the child's relationship with the mother and
that females are traditionally taught a moral perspective that focuses on community and caring
about personal relationships. Care-Based Morality & Justice-Based Morality

Gilligan proposed the Stages of the Ethics of Care theory, which addresses what makes actions
'right' or 'wrong'. Gilligan's theory focused on both care-based morality and justice-based
morality.

Care-based morality is based on the following principles:


 Emphasizes interconnections and universality.
 Acting justly means avoiding violence and helping those in need.
 Care-based morality is thought to be more common in girls because of their connections
to their mothers.
 Because girls remain connected to their mothers, they are less inclined to worry about
issues of fairness.
Justice-based morality is based on the following principles:
 Views the world as being composed of autonomous individuals who interact with
another.
 Acting justly means avoiding inequality.
 Is thought to be more common in boys because of their need to differentiate between
themselves and their mothers.
 Because they are separated from their mothers, boys become more concerned with the
concept of inequality.

Returning to our mole/porcupine scenario, researchers found individuals approached the


problem with two perspectives: justice-based morality or care based morality. Gender
differences were also evident.
Individuals with a justice-based perspective tend to see any dilemma as a conflict between
different claims. The moles want one thing; the porcupine wants something incompatible. They
can't both have a valid claim on the burrow, so only one of them can be right. A solution to the
dilemma is not a resolution of the conflict; it's a verdict, in which one side gets everything and
the other side gets nothing.
Unit – II

Professional Ethics

Ethical Dilemma:

An ethical dilemma or ethical paradox is a decision-making problem between two possible


moral imperatives, neither of which is unambiguously acceptable or preferable. The complexity
arises out of the situational conflict in which obeying one would result in transgressing another.
You control the switch on a set of train tracks. The train is currently going to hit and kill five
people on the track. If you switch it, it will only kill one person. But here’s the kicker…you are
now responsible for the death of that person. Which do you choose? The central question, of
course, is “Should the needs of the few be given up for the needs of the many?”
It’s also a fun one because you can alter it in subtle but important ways. For example, what if the
“one person” on the other track is someone you know? What if that person is your mother? Your
spouse? Your child? What if that one person has the potential to cure cancer?

Mounting Scandals:
In the face of mounting scandals, corporations are adopting codes of ethics. Business schools
are developing ethical courses and consultants are hired to put integrity into corporate cultures.
What relevance do business ethics have for corporate Managers?
Laws and regulations underlie many matters regarding relationships managers have with staff
and customers.
Many diverse groups need to be satisfied and this demands mutual trust. A breach of ethics
breaks down the mutual trust required to maintain individual and organizational moral behavior.
Ethical issues in Business:

The most fundamental or essential ethical issues that businesses must face are integrity and
trust. A basic understanding of integrity includes the idea of conducting your business affairs
with honesty and a commitment to fairly. Preparatory Ethics:

 Be a Role Model.
 Hire Moral People.
 Stress Standards.
 Be Committed.
Proactive steps to address unethical behavior:

1 Create a code of ethics:


Codes of ethics should be written in broad, idealistic terms to communicate the company’s
ethical vision. Be sure to involve key employees in the process of drafting and formalizing the
code of ethics. This will ensure that leaders are on board with and committed to the values.
2.Establish a protocol:
Include in your code of ethics instructions about how to report unethical behavior. A clear
protocol for reporting, such as requesting a private meeting with the appropriate manager or
supervisor.
3.Empower employees:

Grant staff the know-how to appropriately identify and handle ethics violations. Accomplish
this by implementing ethics-training programs for all new and existing employees to increase
the effectiveness of the code.
4.Continuously review the code:

Each year, share copies of the code of ethics with every employee. Ensure that your employees
confirm their understanding of the code by requiring them to sign a form of acknowledgment
afterward.

Ethics in Production and Production Management:

While maintaining high ethical standards and complying with laws and regulations are
important for all businesses, manufacturing companies face additional challenges because of
the potential for harming employees and consumers. When you operate a manufacturing
line, the potential for injury to workers and the possibility that your products are unsafe for
consumers is always present. Implementing policies, procedures and controls to reduce these
risks is not only ethical it is often a legal requirement.
Safe Manufacturing Environment

Ethical businesses prioritize safety in the workplace. In a manufacturing environment, the


presence of machines and raw materials make adequate safety procedures both legally
mandatory and ethically necessary. In addition to basic safety rules, such as wearing protective
gear and refraining from engaging in risky behavior, the main issues relate to a reasonable
balance between inconvenience, productivity and safety. Applying too many rules creates
compliance problems, while not addressing safety issues can lead to injury. If you give the
employees a role in developing safety regulations for a production line, it helps in the
implementation of effective rules that strike the right balance.

Reduced Environmental Effects

Manufacturing processes use energy and produce waste. Legal restrictions govern how
companies can produce energy while limiting emissions and how they have to treat waste to
reduce environmental damage. Ethical concerns influence the overall approach of a company
toward environmental degradation caused by its manufacturing operations. Taking into account
both legal and ethical factors, you have to reduce your energy use by increasing energy
efficiency and exploring the use of alternative technologies. At the same time, you can reduce
waste by looking at where it is generated and changing your manufacturing process to produce
as little as possible.

Secure Workplace

Employers have a legal and ethical responsibility to ensure workers are not subject to sexual
harassment or other forms of workplace hostility and to treat all employees fairly. If your
manufacturing environment has mostly male workers, you have to be especially vigilant that
female employees feel welcome and comfortable. To meet both the legal and ethical challenges,
institute detailed policies against harassment and make sure all employees comply.

Safe Products

In addition to internal issues, manufacturing companies face liability once their products leave
the factory. Product safety is governed by legislation, and ethical concerns mean you should
only ship products that have been tested for safety. While knowingly shipping dangerous
products is illegal and unethical, the use of your products also may have unintended and harmful
effects. Going beyond legal requirements to thoroughly test all aspects of the use of your
products reduces your exposure to possible law suits and fulfills your ethical duties.

Ethics of Marketing Professionals:


Marketing ethics is an area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing .
The following are the code of ethics for marketing professionals.
1)In the area of Product development and Management
2)In the area of Promotion.
3)In the area of Distribution.
Ethics in HRM:

 Cash and Compensation Plans

There are ethical issues pertaining to the salaries, executive perquisites and the annual incentive
plans etc. The HR manager is often under pressure to raise the band of base salaries. There is
increased pressure upon the HR function to pay out more incentives to the top management and
the justification for the same is put as the need to retain the latter. Further ethical issues crop in
HR when long term compensation and incentive plans are designed in consultation with the
CEO or an external consultant. While deciding upon the payout there is pressure on favoring the
interests of the top management in comparison to that of other employees and stakeholders.
 Race, gender and Disability

In many organizations till recently the employees were differentiated on the basis of their race,
gender, origin and their disability. Not anymore ever since the evolution of laws and a
regulatory framework that has standardized employee behaviors towards each other. In good
organizations the only differentiating factor is performance! In addition the power of filing
litigation has made put organizations on the back foot. Managers are trained for aligning
behavior and avoiding discriminatory practices.
 Employment Issues

Human resource practitioners face bigger dilemmas in employee hiring. One dilemma stems
from the pressure of hiring someone who has been recommended by a friend, someone from
your family or a top executive.
Yet another dilemma arises when you have already hired someone and he/she is later found to
have presented fake documents. Two cases may arise and both are critical. In the first case the
person has been trained and the position is critical. In the second case the person has been highly
appreciated for his work during his short stint or he/she has a unique blend of skills with the
right kind of attitude. Both the situations are sufficiently dilemma tic to leave even a seasoned
HR campaigner in a fix.
 Privacy Issues

Any person working with any organization is an individual and has a personal side to his
existence which he demands should be respected and not intruded. The employee wants the
organization to protect his/her personal life. This personal life may encompass things like his
religious, political and social beliefs etc. However certain situations may arise that mandate
snooping behaviors on the part of the employer. For example, mail scanning is one of the
activities used to track the activities of an employee who is believed to be engaged in activities
that are not in the larger benefit of the organization.
Similarly there are ethical issues in HR that pertain to health and safety, restructuring and
layoffs and employee responsibilities. There is still a debate going on whether such activities are
ethically permitted or not. Layoffs, for example, are no more considered as unethical as they
were thought of in the past.

Ethics of Finance and Accounting professionals:

Ethics are important to any business, creating trust and customer confidence. When business
people make unethical decisions, benefiting themselves only, it can lead to the kind of scandal
and outrage that destroy careers and even companies. Nobody wants to deal with shady,
unethical individuals, giving preference to those they can trust to behave in an ethical way.

Trust
Ethical behavior creates a comfort zone where people know that they will be treated fairly.
Ethics means transparency in accounting and financial matters, building trust within a
community and among investors and customers. Once trust is lost, it is very hard to gain it back.

Confidentiality
A key ethical concept dealing with accounting and financial matters is to keep these matters
confidential. An ethical person will not disclose private financial matters to people who should
not have the information. A lot of damage can be done by an employee or consultant spilling the
beans about a firm's or an individual's financial situation or decisions.

Collaboration
An ethical environment fosters collaboration, the sharing of ideas. Collaboration requires a
sense of honesty and ethics. If you know that your idea will be stolen by a colleague or that it
will be misused, you will not collaborate. Each person brings a set of knowledge and skills to a
finance committee or group, and if people refuse to collaborate and share information, good
decisions are harder to make.

Code of Ethics
Emphasizing the importance of ethics in accounting and financial matters, the American
Institute of C Pas requires members to follow its code of professional conduct. Other
organizations also have a code of conduct, such as the California Society of C Pas, the New
York State Society of C Pas and the Institute of Management Accountants.
Unit- III

Cuber Crimes

Introduction to Cyber Crime:

Cyber crime is defined as a crime in which a computer is the object of the crime (hacking,
phishing, spamming) or is used as a tool to commit an offense (child pornography, hate crimes).
Cyber criminals may use computer technology to access personal information, business trade
secrets or use the internet for exploitative or malicious purposes. Criminals can also use
computers for communication and document or data storage. Criminals who perform these
illegal activities are often referred to as hackers.
Cyber crime may also be referred to as computer crime.

Cyber Terrorism:

Cyber terrorism is the use of the Internet to conduct violent acts that result in, or threaten, loss
of life or significant bodily harm, in order to achieve political gains through intimidation. It is
also sometimes considered an act of Internet terrorism where terrorist activities, including acts
of deliberate, large-scale disruption of computer networks, especially of personal computers
attached to the Internet by means of tools such as computer viruses , computer worms , phishing
, and other malicious software and hardware methods and programming scripts.

Social Issues in Cyberspace:

The internet is perhaps the most useful technological advance today. The quick growth of the
internet presents many benefits and drawbacks with respect to Society.

Positive Issues:

1) More people around the world are now turning on computers.

2)The disappearance of cultural barriers.

3)The internet offers a vast amount of information and services.

4)Online business can be done.

5)No time restrictions.

6)Many services are free on the internet.

7)Facilities facilitates communication around the world.

8)Online teaching and learning process.


9)Offers new services every day.
Negative issues:

The internet erases the identity of the person during interaction.

Political Issues in Cyberspace:

With the growth of the internet, more activities are being conducted online. Politics is no
exception to these phenomena. Political parties are increasingly using the internet to spread their
messages by establishing Web Pages.

With such a new medium, there are however many unanswered questions.

1) Why use the internet to spread political messages?


2) What internet strategies will be the most effective?
3) What are the possible pitfalls?
4) What will be the short & long term impact on this technology be on politics?

While some one more skeptical, others believe that the internet may help to refresh or
revolutionist politics.
Through enhanced communication, citizens may become more involved or knowledgeable and
perform their civic responsibilities well. The internet may also change the way in which political
groups conduct election campaigns.

The internet may also enable small groups with limited resources to participate in the political
process. Indeed, the internet may have the potential to change many aspects of politics in ways
that we cannot predict.

Ethical Issues in Cyberspace:

It has a central role in Industry, Commerce, Government, Medicine, Education etc. but like any
other technologies, it also has problematic implications on our society.

It poses and creates some problems related to ethics.

Personal privacy: It enables exchange of information on a large scale from anybody. In this
situation there is increased potential for disclosing information violating privacy of individuals.

Intellectual Property issues in Cyberspace:


With the unprecedented advent of Computers and the Internet and growing popularity of
Commerce, the Intellectual property rights have gained tremendous significance. However, there
is a downside to this trend of increased dependence upon Internet and Information and
communication Technologies (ICT) namely the difficulty posed in the detection & protection of
Intellectual property infringements in the virtual space. The quandary is how does one protect
one’s Intellectual property rights and prevent its unauthorized use in the online medium. The
intellectual property infringements to a greater extent occur in the online medium rather than
offline, due to the ease with which data can be accessed, copied and transferred and the
anonymity associated with the cyberspace.

Intellectual property infringements in cyberspace comprise of any unauthorized or unlicensed


use of trademarks, trade names, service marks, images, music or sound or literary matter.

The Patent law provides powerful protection to the inventions & protects processes and invented
devices and includes unique form of computer soft wares which lead to technical effect. Under
the Patent Act, 1970 penalizes the unauthorized use of patents, and provides for imprisonment
for a term which may extend to 2 years or with fine or both for contravention of secrecy
provisions under section 118. Section 120, penalizes unauthorized claim of patent rights, and
penalizes with a fine of Rupees 1 lake.

There are many theories advocating the protection of Intellectual property rights, but the
common thread in all of the theories is that, the effort and the initiative of the author or creator
needs to be protected and rewarded and to promote creativity. The freedom provided by the
internet is often abused; this is where the role of law and regulation steps in.

1) False information.
2) Possible addiction to the internet.
3) Illegal issues involving the internet.
4) The loss of conventional forms of interaction with others.

Ethical Dimensions of Cuber crimes:

One of the ethical issues that come into play with the cuber crime is ethical hacking. Ethical
hackers are those who try to compromise computer systems for the sake of informing the
content owner, so they can fix the problem.
Some security professionals do this for a living. So there are no ethical issues, since the target
company is aware of and is playing for this service. On the other hand, some security enthusiasts
are freelancing ethical hackers. These people penetrate Software and websites and publish the
problem and sometimes solutions to the problems.
Sometimes these ethical hackers send this information privately to the creator and sometimes
they publish the hack public ally. Software companies and website owners are often upset about
people penetrating their systems, no matter what their intentions?
It is okay to hack a website for the purpose of helping the owner. Sometimes motivations of
hackers plays into how hacking is viewed in the ethical perspective?

Mind set and Psychology of Cuber Criminals:


Cuber criminals display some of the following characteristics.
1) Some measure of technical knowledge.
2) Disregard for the Law.
3) Need for thrill factor.
4) Enjoyment in outsmarting others.
The following are the motives for cuber crimes.
1)Money: This includes anyone who makes a financial profit from the crime, whether it is
a bank employee who uses his computer access to divert funds from someone ease's
account to his own or an outside who hack into a company database to steal information
and sell it to the competitor.
2)Emotion: The most destructive cuber criminals often act out of emotion. Whether anger
or revenge.
3)Policies or Religion: Closely related to emotions category because people get very
emotion about their political and religious beliefs and commit crimes in the name of those
beliefs.
4)Just for fun: This motivation applies to people not for any benefit but simply because
they can.

Sociology of Cuber Crimes:

Computer crime comes in different forms and can cause serious amount of damage. Computer
crime has been around for a long time. With the continual advancements in technology, it has
been made easier for criminals to hide the information of their crimes. These are handled
differently than they have in the past because of this fact.
Computer criminals of today are commonly found to be in their teenage years. But hackers of
1960’s and 1970’s were found to be university graduate students. The reason for such age
difference between the times is that fifty to sixty years ago, you could only find computers on
college campuses where as today, it is uncommon to find a household without computer.

Technology today is also very different than it used to be. There are now passwords and PIN
no. in order to protect the users from having any information stolen. However it also protects the
hackers from being easily identified.

Hackers are able to take this advantage and continue to hack into systems of countries’ and
companies’ etc…

Information warfare:

Is a concept involving the battle space use and management of information and communication
technology (ICT) in pursuit of a competitive advantage over an opponent. Information warfare
may involve collection of tactical information, assurance(s) that one's own information is valid,
spreading of propaganda or disinformation to demoralize or manipulate the enemy and the
public, undermining the quality of opposing force information and denial of information
collection opportunities to opposing forces. Information warfare is closely linked to
psychological warfare .

Information warfare can take many forms:


•Television , internet and radio transmission(s) can be jammed .
• Television, internet and radio transmission(s) can be hijacked for a disinformation
campaign .
•Logistics networks can be disabled.
• Enemy communications networks can be disabled or spoofed, especially online social
community in modern days.
•Stock exchange transactions can be sabotaged, either with electronic intervention, by
leaking sensitive information or by placing disinformation.
• The use of drones and other surveillance robots or webcams.
•Communication management

The U.S. Air Force often attack strategic enemy communications targets, and disabling such
networks electronically. This allows them to be quickly re-enabled communications network
after the enemy territory is occupied. The first application of these techniques was used against
Iraqi communications networks in the Gulf War .
Unit – IV

Corporate governance-I

An independent board, strong controls, transparency and shareholder rights generally increase
market value. But precise impacts of 'good governance' can be hard to pin down. Exact linkages
to share price are not often obvious, governance is more important in some periods than in
others, and it affects some industries more than others.

Recommendations to meet future Governance challenges:

There have been significant, positive changes in boardroom practices over the past 25 years. The
following are the recommendations FOR Directors, CEO’s and Shareholders on how to meet
future Governance Challenges.

1)Items for top of every Board’s Agenda: a) the rule of boards of directors is in the spot
light. b) Today some experts are calling for tougher regulations on board and a larger role
for shareholders in key strategic decision making. C) Also required drastic rethink of how
the board can add long term value to the Company.
2)Transparency, a rising trend in listed Companies: a) Good corporate governance
cannot guarantee that good decisions will always be made. b) What good governance does
do is ensure there is accountability and decisions are taken in an appropriate manner. C)
The recent experience of public ally traded companies has shown that good governance
requires both transparency and fluid communication between the major interest groups.
Importance of Corporate Governance:

1. Changing Ownership Structure: In recent years, the ownership structure of companies


has changed a lot. Public financial institutions, mutual funds, etc. are the single largest
shareholder in most of the large companies. So, they have effective control on the
management of the companies. They force the management to use corporate governance.
That is, they put pressure on the management to become more efficient, transparent,
accountable, etc. They also ask the management to make consumer-friendly policies, to
protect all social groups and to protect the environment. So, the changing ownership
structure has resulted in corporate governance.
2. Importance of Social Responsibility: Today, social responsibility is given a lot of
importance. The Board of Directors have to protect the rights of the customers, employees,
shareholders, suppliers, local communities, etc. This is possible only if they use corporate
governance.
3. Growing Number of Scams: In recent years, many scams, frauds and corrupt practices
have taken place. Misuse and misappropriation of public money are happening everyday in
India and worldwide. It is happening in the stock market, banks, financial institutions,
companies and government offices. In order to avoid these scams and financial
irregularities, many companies have started corporate governance.

4. Indifference on the part of Shareholders: In general, shareholders are inactive in the


management of their companies. They only attend the Annual general meeting. Postal
ballot is still absent in India. Proxies are not allowed to speak in the meetings. Shareholders
associations are not strong. Therefore, directors misuse their power for their own benefits.
So, there is a need for corporate governance to protect all the stakeholders of the company.
5. Globalization: Today most big companies are selling their goods in the global market.
So, they have to attract foreign investor and foreign customers. They also have to follow
foreign rules and regulations. All this requires corporate governance. Without Corporate
governance, it is impossible to enter, survive and succeed the global market.
6. Takeovers and Mergers: Today, there are many takeovers and mergers in the business
world. Corporate governance is required to protect the interest of all the parties during
takeovers and mergers.
7. SEBI: SEBI has made corporate governance compulsory for certain companies. This is
done to protect the interest of the investors and other stakeholders.

Corporate Governance in India:

What is corporate governance?


It is a process set up for the firms based on certain systems and principles by which a company
is governed. The guidelines provided ensure that the company is directed and controlled in a
way so as to achieve the goals and objectives to add value to the company and also benefit the
stakeholders in the long term.
The high profile corporate governance failure scams like the stock market scam, the UTI scam,
Betaken Parish scam, Sat yam scam, which was severely criticized by the shareholders, called
for a need to make corporate governance in India transparent as it greatly affects the
development of the country.

To understand the scope of the legal framework and study the amendments, proxy advisory
firms analyze the role of directors and how they are impacted by changes in the amendments.
Proxy firms offer analytical data for the shareholders and corporate advisory services to
companies.

A company that has good corporate governance has a much higher level of confidence among st
the shareholders associated with that company. Active and independent directors contribute
towards a positive outlook of the company in the financial market, positively influencing share
prices. Corporate Governance is one of the important criteria for foreign institutional investors
to decide on which company to invest in.
The corporate practices in India emphasize the functions of audit and finances that have legal,
moral and ethical implications for the business and its impact on the shareholders. The Indian
Companies Act of 2013 introduced innovative measures to appropriately balance legislative and
regulatory reforms for the growth of the enterprise and to increase foreign investment, keeping
in mind international practices. The rules and regulations are measures that increase the
involvement of the shareholders in decision making and introduce transparency in corporate
governance, which ultimately safeguards the interest of the society and shareholders.
Corporate governance safeguards not only the management but the interests of the stakeholders
as well and fosters the economic progress of India in the roaring economies of the world.

A Few New Provisions for Directors and Shareholders

• One or more women directors are recommended for certain classes of companies
• Every company in India must have a resident directory
• The maximum permissible directors cannot exceed 15 in a public limited company. If
more directors have to be appointed, it can be done only with approval of the shareholders
after passing a Special Resolution
• The Independent Directors are a newly introduced concept under the Act. A code of
conduct is prescribed and so are other functions and duties
• The Independent directors must attend at least one meeting a year
• Every company must appoint an individual or firm as an auditor. The responsibility of
the Audit committee has increased
• Filing and disclosures with the Registrar of Companies has increased
• Top management recognizes the rights of the shareholders and ensures strong
cooperation between the company and the stakeholders
• Every company has to make accurate disclosure of financial situations, performance,
material matter, ownership and governance
Additional Provisions

• Related Party Transactions – A Related Party Transaction (RPT) is the transfer of


resources or facilities between a company and another specific party. The company
devises policies which must be disclosed on the website and in the annual report. All these
transactions must be approved by the shareholders by passing a Special Resolution as the
Companies Act of 2013. Promoters of the company cannot vote on a resolution for a
related party transaction.
• Changes in Clause 35B – The e-voting facility has to be provided to the shareholder for
any resolution is a legal binding for the company.
• Corporate Social Responsibility – The Company has the responsibility to promote social
development in order to return something that is beneficial for the society.
• Whistle Blower Policy – This is a mandatory provision by SEBI which is a vigil
mechanism to report the wrong or unethical conduct of any director of the company.

Corporate Body or Board Structure:

Elected by the shareholders, the board of directors is made up of two types of


representatives. The first type involves inside directors chosen from within the company.
This can be a CEO, CFO, manager or any other person who works for the company daily.
The other type of representative encompasses outside directors, which are chosen
externally and are considered to be independent from the company. The role of the board
is to monitor a corporation's management team, acting as an advocate for stockholders. In
essence, the board of directors tries to make sure that shareholders' interests are well
served. (Watch the video, The Board of Directors , to find out more.)
Board members can be divided into three categories:
• Chairman – Technically the leader of the corporation, the board chairman is responsible
for running the board smoothly and effectively. His or her duties typically include
maintaining strong communication with the chief executive officer and high - level
executives , formulating the company's business strategy, representing management and the
board to the general public and shareholders, and maintaining corporate integrity. The
chairman is elected from the board of directors.

• Inside Directors – These directors are responsible for approving high-level budgets
prepared by upper management, implementing and monitoring business strategy, and
approving core corporate initiatives and projects. Inside directors are either shareholders
or high-level managers from within the company. Inside directors help provide internal
perspectives for other board members. These individuals are also referred to as executive
directors if they are part of company's management team.

• Outside Directors – While having the same responsibilities as the inside directors in
determining strategic direction and corporate policy, outside directors are different in that
they are not directly part of the management team. The purpose of having outside directors
is to provide unbiased and impartial perspectives on issues brought to the board.
Management Team
As the other tier of the company, the management team is directly responsible for the
company's day-to-day operations and profitability.
• Chief Executive Officer (CEO) – As the top manager, the CEO is typically responsible
for the corporation's entire operations and reports directly to the chairman and the board of
directors. It is the CEO's responsibility to implement board decisions and initiatives, as
well as to maintain the smooth operation of the firm with senior management's assistance.
Often, the CEO will also be designated as the company's president and therefore be one of
the inside directors on the board (if not the chairman). However, it is highly suggested that
a company's CEO should not also be the company's chairman to ensure the chairman's
independence and clear lines of authority. (See also: 3 Reasons to Separate CEO and
Chairman Positions .)

• Chief Operations Officer (COO) – Responsible for the corporation's operations, the COO
looks after issues related to marketing, sales, production and personnel. Often more hands-
on than the CEO, the COO looks after day-to-day activities while providing feedback to
the CEO. The COO is often referred to as a senior vice president.

• Chief Financial Officer (CFO) – Also reporting directly to the CEO, the CFO is
responsible for analyzing and reviewing financial data, reporting financial performance,
preparing budgets, and monitoring expenditures and costs. The CFO is required to present
this information to the board of directors at regular intervals and provide it to shareholders
and regulatory bodies such as the Securities and Exchange Commission (SEC). Also usually
referred to as a senior vice president, the CFO routinely checks the corporation's financial
health and integrity. (For additional reading, see What Does a Chief Financial Officer (CFO)
Do? )

The Bottom Line

Together, management and the board of directors have the ultimate goal of maximizing
shareholder value. In theory, management looks after the day-to-day operations, and the board
ensures that shareholders are adequately represented. But the reality is that many boards include
members of the management team.

When you are researching a company, it's always a good idea to see if there is a good balance
between internal and external board members. Other good signs are the separation of CEO and
chairman roles and a variety of professional expertise on the board from accountants, lawyers
and executives. It's not uncommon to see boards that consist of the current CEO (who is
chairman), the CFO and the COO, along with the retired CEO, family members, etc. This does
not necessarily signal that a company is a bad investment, but as a shareholder, you should
question whether such a corporate structure is in your best interests .
Corporate Board Process and Evaluation:

Good governance requires boards to have effective processes and to evaluate their performance
and appraise directors at least once a year. Companies, act 2013 has introduced significant
changes in the board processes.
1) Number of Directors: Specifically provides that a company may have a maximum of 15
Directors. It permits every company to appoint directors above the prescribed limit of 15 by
authorizing such increase through a special resolution.
2) Resident Director: It introduces the requirement of appointing a resident director ire; a
person who has stayed in India for a total period of not less than 182 days in the previous
calendar year.
3) Independent Director: At least one third of the Board to be comprised of independent
directors. He should be a person of integrity, relevant expertise and experience.
4) Woman Director: Listed companies shall be required to appoint at least one Woman
director on its board. It shall be required to comply with this provision within 6 months
from the date of incorporation.

Conclusion: Companies, Act 2013 has introduced significant changes regarding Board
processes. These changes would institutionalize good corporate governance and not make
governance over- dependent on the presence of certain individuals on the board.

Corporate Board Committees:

The following are some of the important committees of the Board-


• Audit Committee
• Shareholders Grievance Committee
• Remuneration Committee
• Risk Committee
• Nomination Committee
• Corporate Governance Committee
• Corporate Compliance Committee
• Ethics Committee

1) Audit committee

• Oversight of the company’s financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible.
• Recommending the appointment and removal of external auditor, fixation of audit fee
and also approval for payment for any other services.
• Reviewing with management the annual financial statements before submission to the
board, focusing primarily on;
• Any changes in accounting policies and practices.
• Major accounting entries based on exercise of judgment by management.
• Qualifications in draft audit report.
• Significant adjustments arising out of audit.
• The going concern assumption.
• Compliance with accounting standards.
• Compliance with stock exchange and legal requirements concerning financial statements
 Any related party transactions

• Reviewing with the management, external and internal auditors, the adequacy of internal
control systems.
• Reviewing the adequacy of internal audit function, including the structure of the internal
audit department, staffing and seniority of the official heading the department, reporting
structure coverage and frequency of internal audit.
• Discussion with internal auditors any significant findings and follow up there on.
• Reviewing the findings of any internal investigations by the internal auditors into matters
where there is suspected fraud or irregularity or a failure of internal control systems of a
material nature and reporting the matter to the board.
• Discussion with external auditors before the audit commences about nature and scope of
audit as well as post-audit discussion to ascertain any area of concern.
• Reviewing the company’s financial and risk management policies.
• To look into the reasons for substantial defaults in the payment to the depositors,
debenture holders, shareholders (in case of nonpayment of declared dividends) and
creditors.

Review of information by Audit Committee:

The Audit Committee shall mandatory review the following information:


• Financial statements and draft audit report, including quarterly / half-yearly financial
information;
• Management discussion and analysis of financial condition and results of operations;
• Reports relating to compliance with laws and to risk management;
• Management letters / letters of internal control weaknesses issued by statutory / internal
auditors; and
• Records of related party transactions
• The appointment, removal and terms of remuneration of the Chief internal auditor shall
be subject to review by the Audit Committee

Shareholders grievance committee

In terms of Clause 49-IV(G)(iii) of the Listing Agreement, a board committee under the
chairmanship of a non-executive director shall be formed to specifically look into the redress of
shareholder and investors complaints like transfer of shares, non receipt of balance sheet, non
receipt of declared dividends etc. This committee shall be designated as “Shareholders/
Investors Grievance Committee”.

The terms of reference of our Shareholders’/ Investors Grievance Committee are given below:
“To allot the Equity Shares of the Company, and to supervise and ensure:
• Efficient transfer of shares; including review of cases for refusal of transfer transmission
of shares and debentures;
• Redress of shareholder and investor complaints like transfer of shares, non-receipt of
balance sheet, non-receipt of declared dividends etc;
• Issue of duplicate / split / consolidated share certificates;
• Allotment and listing of shares;
• Review of cases for refusal of transfer / transmission of shares and debentures;
• Reference to statutory and regulatory authorities regarding investor grievances; and to
otherwise ensure proper and timely attendance and redress of investor queries and
grievances.

The Shareholders/ Investor Grievances Committee looks into redress of shareholder and investor
complaints, issue of Duplicate/ Consolidated Share Certificates, Allotment and Listing of shares
and review of cases for refusal of
Transfer/ Transmission of shares and debentures and reference to Statutory and Regulatory
Authorities. The scope and functions of the Shareholders/Investor Grievances Committee are as
per Clause 49 of the Listing Agreement.

Remuneration committee

The role of a Remuneration Committee is:


• To decide and approve the terms and conditions for appointment of executive directors
and/ or whole time Directors and Remuneration payable to other Directors and matters
related thereto.
• To recommend to the Board, the remuneration packages of the Company’s
Managing/Joint Managing/ Deputy Managing/Whole time / Executive Directors, including
all elements of remuneration package (ire. salary, benefits, bonuses, perquisites,
commission, incentives, stock options, pension, retirement benefits, details of fixed
component and performance linked incentives along with the performance criteria, service
contracts, notice period, severance fees etc.);
• To be authorized at its duly constituted meeting to determine on behalf of the Board of
Directors and on behalf of the shareholders with agreed terms of reference, the Company’s
policy on specific remuneration packages for Company’s Managing/Joint Managing/
Deputy Managing/ Whole-time/ Executive Directors, including pension rights and any
compensation payment;
• To implement, supervise and administer any share or stock option scheme of the
Company.
• to review the overall compensation policy, service agreements and other employment
conditions to Executive Directors and senior executives just below the Board of Directors
and make appropriate recommendations to the Board of Directors.
• to review the overall compensation policy for Non-Executive Directors and Independent
Directors and make appropriate recommendations to the Board of Directors;
• to make recommendations to the Board of Directors on the increments in the
remuneration of the Directors.
• to assist the Board in developing and evaluating potential candidates for senior executive
positions and to oversee the development of executive succession plans;
• to review and approve on annual basis the corporate goals and objectives with respect to
compensation for the senior executives and make appropriate recommendations to the
Board of Directors.
• to review and make appropriate recommendations to the Board of Directors on an annual
basis the evaluation process and compensation structure for our Company’s officers just
below the level of the Board of Directors.
• to provide oversight of the management’s decisions concerning the performance and
compensation of other officers of our Company.

Risk committee

The committee comprises a minimum of three independent non-executive directors, as


well as the chief executive and financial director. The chair of the board may not serve as
chair of this committee. Members of the committee are individuals with risk management
skills and experience. The committee’s responsibilities include:
• Review and approve for recommendation to the board a risk management policy and
plan developed by management. The risk policy and plan are reviewed annually.
• Monitor implementation of the risk policy and plan, ensuring an appropriate enterprise-
wide risk management system is in place with adequate and effective processes that
include strategy, ethics, operations, reporting, compliance, IT and sustainability.
• Make recommendations to the board on risk indicators, levels of risk tolerance and
appetite.
• Monitor that risks are reviewed by management, and that management’s responses to
identified risks are within board-approved levels of risk tolerance.
• Ensure risk management assessments are performed regularly by management.
• Issue a formal opinion to the board on the effectiveness of the system and process of risk
management.
• Review reporting on risk management that is to be included in the integrated annual
report.
• Review annually the charters of the group’s significant subsidiary companies’ risk
committees, and their annual assessment of compliance with these charters to establish if
the Nappers committee can rely on the work of these risk committees.
• Perform an annual self-assessment of the effectiveness of the committee, reporting these
bindings to the board.

Nomination committee

The primary role of the Nomination Committee of the board is to assist the board by identifying
prospective directors and make recommendations on appointments to the board and the senior
most level of executive management below the board. The committee also clears succession
plans for these levels. The Nomination Committee is responsible for making recommendations
on board appointments and on maintaining a balance of skills and experience on the board and
its committees.
Succession planning for the board is a matter which is devolved primarily to the Nomination
Committee, although the committee’s deliberations are reported to and debated by the full
board. The board itself also regularly reviews more general succession planning for the senior
management of the group.

Corporate governance committee

Together with the audit and compensation committees, the nominating/corporate governance
committee rounds out the three standing committees of a public company’s board of directors. It
plays a critical role in overseeing matters of corporate governance for the board, including
formulating and recommending governance principles and policies. As its name implies, this
committee is charged with enhancing the quality of nominees to the board and ensuring the
integrity of the nominating process. Given the recent focus on board composition and diversity,
director elections, and proxy access, the role of nominating/corporate governance committee is
in the spotlight.
Corporate compliance committee

The primary Objective of the Compliance Committee is to review, oversee and monitor:

• The company’s compliance with applicable legal and regulatory requirements.


• The company’s policies, programs, and procedures to ensure compliance with relevant
laws, the company’s code of conduct, and other relevant standards
• The company’s efforts to implement legal obligations arising from settlement
agreements and other similar documents
• Perform any other duties as are directed by the board of directors of the company.

The committee’s specific responsibilities in this area include:


• Overseeing the corporate compliance program, including policies and practices designed
to ensure the organization’s compliance with all applicable legal, regulatory, and ethical
requirements.
• Recommending approval of the annual corporate compliance plan and reviewing
processes and procedures for reporting concerns by employees, physicians, vendors, and
others.
• Recommending organizational integrity guidelines and a Code of Conduct.
• Reviewing and reassessing the guidelines and Code of Conduct at least annually

Ethics committee

The possible roles for an Ethics Committee are:


• Contribute to the continuing definition of the organization’s ethics and compliance
standards and procedures.
• Assume responsibility for overall compliance with those standards and procedures.
• Oversee the use of due care in delegating discretionary responsibility.
• Communicate the organization’s ethics and compliance standards and procedures,
ensuring the effectiveness of that communication.
• Monitor and audit compliance.
• Oversee enforcement, including the assurance that discipline is uniformly applied.
• Take the steps necessary to ensure that the organization learns from its experiences.

But an ethics committee can do much more. The committee can be charged to meet all seven
requirements for an effective ethics management process. For each of the above arenas of
responsibility there may be several specific roles.
Independent Director:

Independent directors as the name suggests are directors on Board of a company who are
independent individuals, not having any other relationship or transaction with the company.
Following class of companies are required to appoint at least 1/3 of total number of directors on
their Board of Directors as independent directors:
• Listed Companies,
• Public Companies having paid up share capital of one hundred corer rupees or more; or
• Public Companies having turnover of three hundred corer rupees or more;
• Public Companies which have, in aggregate, outstanding loans or borrowings or
debentures or deposits, exceeding two hundred corer rupees.

The compensation offered to independent directors in the form of “sitting fee” has been
increased from rupees 20,000 to max of rupees 1,00,000 per meeting. Some researchers have
complained that firms have appointed “Independent directors who are overly sympathetic to
management, while still technically independent according to regulatory definitions.
One complaint against the regulations is that CEO’s may find loopholes to influence directors.
The real question is since independent directors only play a supervisory role, should they be
penalized in the event of a discrepancy in their responsibilities. They are expected to be
independent from the management and act as the trustees of the shareholders. This implies that
they are obligated to be fully aware of and question the conduct of the organization on relevant
issues. The problem is that independent director cannot commitment to ethical practices.

Indian model of Corporate Governance

Post liberalization, India has adopted the market model ire; liberalized foreign investment in
Indian Companies. This has led to increasing public investment in the equity capital of
companies.

Now the focus is equally on the monitory shareholders interest, enterprise performance and
corporate social responsibility. Ownership structure is affecting the implementation of the code
of ethics. Concentrated ownership has certain positive and negative influences on corporate
governance.
Tunneling of funds is one of the negative influences. In practice independent directors are
appointed by Management. And therefore it is likely that they will be loyal to the business
family.
India is weak in the implementation of rules and regulations. Endeavor on the part of the
government to improve the same in minimal. However, there is a need to speed up the process
of implementation by strengthening existing institutions and creating new ones if required.
BIBLOGRAPHY
Wikipedia comedian
wienie. com

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