Forces and society: · The Market Capitalism

Forces in Business, government
and society have been fundamental in shaping the world as it is today. They work together to create better solutions in all the three

– It encompasses a range of actions and institutions and satisfies human needs
by providing them products and services in exchange for profit.

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– A structure
and process in society that has the authority to make and apply policies and
rules. The economic and regulatory powers of the government are the primary
facets that affect a business.

Society – A cooperative network of human relations
composed of ideas, institutions, and material things that interact with each other.
It is organised by flows of power.


Four different
models describe the relationship among business, government and society:

The Market
Capitalism Model – It believes that

Ø  Government regulation should be limited

Ø  Market will discipline private economic activity to
promote social welfare

Ø  The proper measure of corporate performance is profit

Ø  The ethical duty of managers is to promote the
interests of owners and investors

The Dominance
Model – It believes that

Ø  Corporations are insulated from pressures holding them

Ø  Regulation by a government in thrall to big business
is feeble

Ø  Market forces are inadequate to ensure ethical

The Countervailing
Forces Model – It believes that

Ø  Business is deeply integrated into an open society and
must respond to both economic and non-economic forces

Ø  It is not isolated from any part of the society nor is
it always dominant

The Stakeholder
Model – It believes that

Ø  A corporation that embraces stakeholders prospers
& sustain its wealth creating function better with the support of a network
of parties beyond shareholders

Ø  It is the ethical way to manage because stakeholders
have moral rights that grow from the way powerful corporations affect them

Considering the
power that the Reliance Industries Limited wields on the common masses and the
ruling government, we believe that the Dominance model would best describe
RIL’s relationship with the Government, Society and other corporations. However,
this assumption will be verified in the following sections using secondary data
such as industry reports and news articles.

Dominance Model:

The dominance model represents the perspective of people
who critic businesses. A small group of privileged (corporations, government
and business leaders) control the pyramid within which lies the society. Power
and wealth are focused in a select group. In this model, the society has no
authority or control but is under the foot of the businesses and government.
The corporations and the government take advantage of the society. Businesses
have 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 become
our Government… and both parties are moving deeper into the grip of global
corporatism. Corporate power over our political economy and its control over
people’s lives knows few boundaries”

H1: Relationship between Reliance Industries Limited
& Government:

The Hypothesis H1 states that there is a significant
relationship between the Reliance Industries Limited and the Government. In
this section, we attempt to prove this hypothesis using historical instances
from industry reports and news articles.

Instance 1: Mukesh Ambani’s speech
at the Reliance’s “intelligent” phone launch speaks for the corporate
cultures and private–public sector relationship in India.

Mukesh Ambani’s live speech on the launch of Jio was widely
compared to Steve Jobs’ speech on the launch of the i-Phone. However, the
difference between the two speeches starkly highlights the make-up of society,
the culture of corporates as well as the relationship between the private and
public sector in India and the United States. Sample of some of Ambani’s
statements are:


















to the Prime Minister on several occasions, Ambani piggybacked on the country’s
most influential political figure. Ambani puts on the veil of patriotism and
socialism to please his target audience and the government.

tremendous progress, India continues to be a closed economy in sectors such as
telecom and power, where being in favourable terms with the government, still
India’s biggest business entity, can ensure large and lasting profits. To
survive in the market and to succeed in businesses, the support of the
government is inevitable. The Reliance Industries Limited has been a key
beneficiary of the said system.

speech emphasized social upliftment and patriotism, thus sending out a message
to the government that the Reliance Industries Limited is aligning its goals
with the Government’s, thereby making his company the only deserving candidate
for huge government schemes such as the Digital India. Similarly, Jio Phone was
never intended to be a disruptive product, but only a way that helps the
government realise its target of universal internet connectivity.

American and Western European companies who are focus on investing in their own
nations do not portray their products or services as ones that will benefit
their government’s targets to. Besides, the India’s biggest business tycoon has
showcased similar sentiments for other governments as well. Other big Indian
corporations such as HUL, Tata and ITC, too, make sure that they appease the government
through their annual reports and events.

developing economies are characterised by the dependence of the Corporations on
the Governments. A survey of senior company executives from McKinsey in 2010 confirms
this. On every criteria, the respondents from developing countries were much
more concerned about the government than those in developed economies.

government has no business being in business’ is a cherished ideal. Corporate speeches will be a
leading indicator of India’s move towards that ideal.




Instance 2:  Gas Price Raise to
solely benefit RIL?


The ruling Government of India had been
accused of raising the gas prices primarily to benefit the Reliance Industries
Limited with a whopping 1.2 lakh crore rupees despite incurring an additional
cost 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 Jio
got $530 million undue benefit: government auditor


The Government Auditor has claimed that
the telecom wing of the Reliance Industries Limited’s has gotten an undue benefit
of about $530 million since the Indian government gave the unit permission to
offer its voice services over the wireless broadband spectrum that it had won way
back in the year 2010.


The telecommunications department has been accused
of allowing the Reliance Jio to migrate from being an internet service provider
to a full services provider at a cost that is much lower than the prevailing
market prices. The migration had been allowed at price levels seen in 2001.

The government’s lapses resulted “in
an undue advantage of 33.67 billion rupees ($528.56 million)” for the
unit, Reliance Jio, “due to non-accounting of time value of migration fees,” the
comptroller and auditor general of India said in a report. The report also mentions
that the airwave buyers did not roll out obligations, though it has been four
years since the auction has happened.

The above-mentioned historical instances clearly
portray the Reliance Industries Limited to have an amicable, if not favoured,
relationship with the Government of India. Hence, we can conclude that there
exists a significant relationship between the Reliance Industries Limited and
the Government.

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