Page 164 - DMGT401Business Environment

Unit 7: Socio-cultural Environment

Currently, it covers six states, and multiple commodities like prawns, cotton and coffee with Notes
4,000 Choupals. The rest is history. ITC's E-Choupal did in a short time what the Indian
government couldn't do in 55 years, i.e., smoothing of the distribution network of agriculture
produces.

In a selected village ITC installs a computer with solar-charged batteries for power and a VSAT
Internet connection. A local farmer called Sanchalak (conductor) operates the computer on
behalf of ITC, but exclusively for farmers. The e-choupal offers farmers and the village community
five distinct services:

1. Information: Its gives daily weather forecast, information about prices of various crops,
e-mails to farmers and ITC officials, news and any other information-all this in the local
language, free of cost.
2. Knowledge: It provides knowledge about modern farming techniques and methods specific
to each crop and region; knowledge about soil testing, expert advice that is mostly sourced
from agriculture universities, etc., all for free.
3. Purchase: Farmers can buy seeds, fertilizers, pesticides, and a host of other products and
services ranging from cycles and tractors to insurance policies, banks, and cafeteria to
FMCGs.
4. Sales: At harvest time, ITC offers to buy the crop directly from any farmer at the previous
day's closing price; the farmer then transports his crop to an ITC processing centre where
the crop is weighed electronically and assessed for quality. The farmer is then paid for the
crop and given a transport fee. "Bonus points," which are exchangeable for products that
ITC sells, are given for crops with quality above the norm. In this way, the e-Choupal
system bypasses the government-mandated trading mandis.
Farmers selling directly to ITC through an e-Choupal typically receive a higher price for
their crops than they would receive through the mandi system, on average about 2.5%
higher (about US$6 per ton). The total benefit to farmers includes lower prices for inputs
and other goods, higher yields, and a sense of empowerment. At the same time, ITC
benefits from net procurement costs that are about 2.5% lower (it saves the commission
fee and part of the transport costs it would otherwise pay to traders who serve as its
buying agents at the mandi) and it has more direct control over the quality of what it buys.
5. Development Work: NGOs working for cattle breed improvement and water harvesting,
and women self-help groups are also reaching villages through e-choupals. In some states,
farmers can even access their village. ITC is also planning to give health services through
e-choupal.
7.5 Business Ethics

Business ethics refers to the measurement of business behaviour on standards of right and
wrong, rather than relying entirely on principles of accounting and management. Ethics is not
merely desirable but is also essential for the smooth functioning of a business. If businesses
don't follow ethics it will be difficult to build trust; and there will be no scope for business.
Ethics has a role in a buyer and seller relationship, or even for a competitor relationship. Its
objectives of ethics are:
1. Studying human behaviour and making an evaluative assessment about them as moral or
immoral (diagnostic goal) beings.
2. Establishing moral standards and norms of behaviour.

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