Type: Process Essays
Sample donated: Abel Perkins
Last updated: May 12, 2019
In the universe of human endeavour, we can distinguishsub-divisions of economic, political and social activity – that is, Business,Government and Society – in every civilization throughout time. Interplay amongthese activities creates an environment in which businesses operate.
Theenvironments of business, and the historical forces that shape them, haveprofound implications. Simultaneously, the actions of companies and industriesshape not only their external environments but also the deeper course of history.Business is not simply a passive entity that reacts tohistorical and environmental forces. On the contrary, although stronglyconstrained by its environment, businesses have a powerful capacity to shapesociety and change history in ways large and small. Business seeks andexercises political power in a government that is extraordinarily open toinfluence. Business power, like any form of social power, is intangible, itsexercise not subject to direct or exact calibrations. Having no physical stateto be observed, it is known to be great or small solely by its effects on theworld.The objective of the project is to:· Describeand analyse the Business relations of the Reliance Industries Limited· Describeand analyse the Government relations of the Reliance Industries Limited· Describeand analyse the Society relations of the Reliance Industries Limited QUALITATIVE RESEARCHBusiness,Government & Society:Humans aresocial beings and from ages, we have survived by relying on each other by meansof multiple organized forces.
Each of these organized forces has its mix ofregulations and process to culminate the optimum functioning of the organizedbody. Therefore, to learn and understandthe interaction and interplay between these bodies, we have classified anddistinguished them into three broad subdivisions, which are Business,Government and Society.Business encompasses a range oforganized bodies, which covers activities and actions pertaining to management,manufacturing, finance, trade, service etc. These are usually through acollective allocation and use of resources to achieve specific declared goals,which are mostly involved in the provision of goods and services to customersand fundamentally make a monetary profit of it.Government is (are) the group of peopleand institutions, which make and apply rules and policies. It also exercisesand exerts Sovereign authority over a state and nation or any other body ofpeople.
Usually tasked with protection of the populace of both external and internalthreats, managing currency and economy with the policies and regulations theymake.Society is a cooperative network ofhuman relations, which are organized by flows of power and relatively distinctin its boundaries from other analogous networks. Composed of three elementwhich are: 1) Ideas, 2) Institutions and 3) Material things.
The study ofthis is important as any organization whether in the Business, Government orSociety field interact with other organizations in the subdivisions. Noorganization can function alone and therefore all co-exist, dependent and theaction of one complement and affect the functioning of the other.If we look atfrom a company’s point of view, we need to recognize that a company operatesnot only within the market but also within the society. It is because if thecompany’s actions are not accepted by the society, the firm will not be able togo through with their objectives and make profits. In addition, companies are important to anation as they are the core contributors of development for a country which isin line with the objectives if the government. The Government also needs tokeep in touch with the needs of the society as the leaders elected by thepeople run the institutions of the government. Thus, the government has tobalance development and socialistic views for the country.
This is reflected inthe regulations made for the companies, so as the companies do not fall in thebad books of the government as the government as the power to penalize thecompanies heavily and revoke their business options. Which is why a completeand through understanding of the interactions between these entities areneeded.TheReliance Industries Limited:RelianceIndustries Limited is an Indian holding company in the Business sub-division(from the three major sub-divisions). With an annual sale of USD 20 billion andtotal assets of USD 21billion it has its presence in the fields of Energy,petrochemicals, textiles, natural resources, retail and telecommunications withits products and services reaching across the globe to around 100 countries. Itis also the most profitable and the largest publicly traded company in India.
The company wasfounded by the Ambani brothers Dhirubhai and Ramnikbhai in the 1960s as apartnership and in 1965 the partnership ended and Dhirubhai Ambani got holdover the reins which he used to continue the Polyester business which led tothe culmination of the Reliance Textile Industries Pvt. Ltd. in 1966.In 1985, thename changed from Reliance textile Industries Pvt. Ltd.
to Reliance IndustriesLimited, the name that we are so familiar with. To further their foray intoother markets, the Hazira petrochemical plant was commissioned in 1991-92 andin 1993, Reliance looked into the Overseas Capital Market through the issue ofReliance Petroleum. From 1995onwards, the company delved into the Telecom Industry and in 1998 RIL oved inpackaged gas (LPG) under the brand name reliance Gas. The company moved intothe retailing sector with the introduction of Reliance Fresh in 2006 and thebroadband services in 2010 with the acquisition of Infotel broadband services.
In 2016, Reliance set up a disruption in the Telecom market with the introductionof Reliance Jio.Reliance hasbeen a pioneer in the various in India and continues to do so. With franchisessuch as IPL, Reliance TV etc.
under its belt it has never stopped diversifyingand moving into new segments and influencing these markets. Reliance hasalso been a key investor in development plans of India. Unlike many majorMulti-National, RIL heavily invests in India and these can be reflected on theprojects like for example Jio. RelianceJio is RIL’s 4G (LTE) services, which has caused a major disruption in thetelecom market in 2016.
It has had a huge impact in all the three divisionsi.e. Government, Business and Society. In the Business aspect, it has caused arevolution in the market and brought about innovation. It has also forced competitorsto up their game and change their playstyle of customer service. In the domainof the society, it has brought to the masses ease of use of data at a cheaperprice, which can be seen by its popularity and subscription in such a shortnotice.
The Society in fact lauds Jio for its achievements and encourages suchan approach. On the other hand, the government has kept a check on Jio so thatthe telecom industry does not become monopolistic as it was driving many of itscompetitors to losses. The government therefore regulated it by asking Jio towithdraw its Summer Surprise offer.
In addition, the government also supportedJio’s innovation by supporting its expansion and ruling in favour of Jio whenits competitors deliberately refused to connect Jio calls with their services.From thisexample, we can therefore see a small glimpse of interaction of RelianceIndustries Limited with Business, Government and the Society about which wewill go in depth later. HYPOTHESIS CONSTRUCTION:H1: There exists a significantrelationship between the Reliance Industries Limited and the GovernmentH2: There exists a significantrelationship between the Reliance Industries Limited and the SocietyH3: There exists a significantrelationship between the Reliance Industries Limited and other Businesses andCorporations RESEARCH METHODOLOGYSelecting aBGS Model:Forces in Business, governmentand society have been fundamental in shaping the world as it is today.
They work together to create better solutions in all the threeelements.· Business– It encompasses a range of actions and institutions and satisfies human needsby providing them products and services in exchange for profit. · Government– A structureand process in society that has the authority to make and apply policies andrules. The economic and regulatory powers of the government are the primaryfacets that affect a business.· Society – A cooperative network of human relationscomposed of ideas, institutions, and material things that interact with each other.It is organised by flows of power.
Four differentmodels describe the relationship among business, government and society:· The MarketCapitalism Model – It believes thatØ Government regulation should be limitedØ Market will discipline private economic activity topromote social welfareØ The proper measure of corporate performance is profitØ The ethical duty of managers is to promote theinterests of owners and investors· The DominanceModel – It believes thatØ Corporations are insulated from pressures holding themresponsibleØ Regulation by a government in thrall to big businessis feebleØ Market forces are inadequate to ensure ethicalmanagement· The CountervailingForces Model – It believes thatØ Business is deeply integrated into an open society andmust respond to both economic and non-economic forcesØ It is not isolated from any part of the society nor isit always dominant· The StakeholderModel – It believes thatØ A corporation that embraces stakeholders prospers& sustain its wealth creating function better with the support of a networkof parties beyond shareholdersØ It is the ethical way to manage because stakeholdershave moral rights that grow from the way powerful corporations affect themConsidering thepower that the Reliance Industries Limited wields on the common masses and theruling government, we believe that the Dominance model would best describeRIL’s relationship with the Government, Society and other corporations. However,this assumption will be verified in the following sections using secondary datasuch as industry reports and news articles.TheDominance Model:The dominance model represents the perspective of peoplewho critic businesses.
A small group of privileged (corporations, governmentand business leaders) control the pyramid within which lies the society. Powerand wealth are focused in a select group. In this model, the society has noauthority or control but is under the foot of the businesses and government.The corporations and the government take advantage of the society. Businesseshave very high power and changes in the systems become crucial. Ralph Nader, an American political activist, author,lecturer, and attorney who is noted for his involvement in consumer protection,environmentalism, and government reform causes, said: “The Corporations… have becomeour Government… and both parties are moving deeper into the grip of globalcorporatism. Corporate power over our political economy and its control overpeople’s lives knows few boundaries”H1: Relationship between Reliance Industries Limited& Government:The Hypothesis H1 states that there is a significantrelationship between the Reliance Industries Limited and the Government.
Inthis section, we attempt to prove this hypothesis using historical instancesfrom industry reports and news articles.Instance 1: Mukesh Ambani’s speechat the Reliance’s “intelligent” phone launch speaks for the corporatecultures and private–public sector relationship in India.Mukesh Ambani’s live speech on the launch of Jio was widelycompared to Steve Jobs’ speech on the launch of the i-Phone.
However, thedifference between the two speeches starkly highlights the make-up of society,the culture of corporates as well as the relationship between the private andpublic sector in India and the United States. Sample of some of Ambani’sstatements are: Referringto the Prime Minister on several occasions, Ambani piggybacked on the country’smost influential political figure. Ambani puts on the veil of patriotism andsocialism to please his target audience and the government.Despitetremendous progress, India continues to be a closed economy in sectors such astelecom and power, where being in favourable terms with the government, stillIndia’s biggest business entity, can ensure large and lasting profits. Tosurvive in the market and to succeed in businesses, the support of thegovernment is inevitable. The Reliance Industries Limited has been a keybeneficiary of the said system.Ambani’sspeech emphasized social upliftment and patriotism, thus sending out a messageto the government that the Reliance Industries Limited is aligning its goalswith the Government’s, thereby making his company the only deserving candidatefor huge government schemes such as the Digital India.
Similarly, Jio Phone wasnever intended to be a disruptive product, but only a way that helps thegovernment realise its target of universal internet connectivity.TheAmerican and Western European companies who are focus on investing in their ownnations do not portray their products or services as ones that will benefittheir government’s targets to. Besides, the India’s biggest business tycoon hasshowcased similar sentiments for other governments as well. Other big Indiancorporations such as HUL, Tata and ITC, too, make sure that they appease the governmentthrough their annual reports and events.Mostdeveloping economies are characterised by the dependence of the Corporations onthe Governments. A survey of senior company executives from McKinsey in 2010 confirmsthis. On every criteria, the respondents from developing countries were muchmore concerned about the government than those in developed economies.
‘Thegovernment has no business being in business’ is a cherished ideal. Corporate speeches will be aleading indicator of India’s move towards that ideal. Source: http://www.thehindu.
com/thread/politics-and-policy/jio-phone-where-business-meets-socio-capitalism-meets-government/article19379656.ece Instance 2: Gas Price Raise tosolely benefit RIL? The ruling Government of India had beenaccused of raising the gas prices primarily to benefit the Reliance IndustriesLimited with a whopping 1.2 lakh crore rupees despite incurring an additionalcost of about 54,000 crore rupees every year. The Chief Minister of Delhi, Mr.Arvind Kejriwal brought the issue to light.
Instance 3: India’s Reliance Jiogot $530 million undue benefit: government auditor The Government Auditor has claimed thatthe telecom wing of the Reliance Industries Limited’s has gotten an undue benefitof about $530 million since the Indian government gave the unit permission tooffer its voice services over the wireless broadband spectrum that it had won wayback in the year 2010. The telecommunications department has been accusedof allowing the Reliance Jio to migrate from being an internet service providerto a full services provider at a cost that is much lower than the prevailingmarket prices. The migration had been allowed at price levels seen in 2001.The government’s lapses resulted “inan undue advantage of 33.
67 billion rupees ($528.56 million)” for theunit, Reliance Jio, “due to non-accounting of time value of migration fees,” thecomptroller and auditor general of India said in a report. The report also mentionsthat the airwave buyers did not roll out obligations, though it has been fouryears since the auction has happened.The above-mentioned historical instances clearlyportray the Reliance Industries Limited to have an amicable, if not favoured,relationship with the Government of India. Hence, we can conclude that thereexists a significant relationship between the Reliance Industries Limited andthe Government.