Chapter 6: Social Responsibilities of Business
Select the proper option from the option given below and rewrite the completed sentence.
Business is a ________ activity.
Socio-economic
Service
Charitable
Solution:
Business is a socio-economic activity.
Explanation:
The primary objective of any business enterprise is profit maximisation. Profit acts as a measure of success. However, it is argued that business enterprises are not just profit-making entities. They also fulfil the duties and responsibilities towards society, as their members carry out activities that are favourable to the society. Thus, a business activity has economic as well as social goals. Therefore, it is regarded as a socio-economic activity.
The business organization should try to make ____________ utilization of natural resources.
Minimum
Maximum
Optimum
Solution:
The business organization should try to make Optimum the utilization of natural resources.
For economic growth and national security ____________ stability is reqOptions
Political
Social
Economic
Solution:
For economic growth and national security Political stability is required.
Making timely paymenet of proper taxes is the responsibility of organisation towards ____________.
Shareholders
Customers
Government
Solution:
Making timely payment of proper taxes is the responsibility of the organisation towards Government.
Businessmen are __Options
Representatives
leaders
Trustees
Solution:
Businessmen are Trustees of the society.
The business should provide periodic information to ____________.
Customers
Owners
Employees
Solution:
Business should provide periodic information to Owners.
The business should offer adequate opportunities of promotion to their ____________.
Employees
Customers
Investors
Solution:
A business should offer adequate opportunities of promotion to their Employees
The term 'Ethics' is derived from the ____________ word 'Ethos' which means character.
Latin
French
Greek
Solution:
The term 'Ethics' is derived from the Greek word 'Ethos' which means character.
Business ethics refers to the ____________ system of principles.
Economic
Social
Moral
Solution:
Business ethics refers to the Moral system of principles.
The business organisation should protect health and provide safety measures to ____________
employees
owners
investors
Solution:
The business organization should protect health and provide safety measures to employees.
At least __________________ % of the average net profit should be spent on C.S.R.
5%
2%
3%
Solution:
At least 2% of the average net profit should be spent on C.S.R.
Match the pairs.
Solution:
Give one word/phrase/term for the following sentence.
Name the philosophy related to social responsibility propounded by Mahatma Gandhi.
Solution:
Name the philosophy related to social responsibility propounded by Mahatma Gandhi. - Trusteeship
Duties, obligations of business directed towards the welfare of society.
Solution:
Duties, obligations of business directed towards the welfare of society. - Social responsibility
Getting good quality products is the basic right of this group of society.
Solution:
Getting good quality products is the basic right of this group of society. - Consumers
Providing fair returns on investment is the responsibility of the organisation towards this group.
Solution:
Providing fair returns on investment is the responsibility of the organisation towards this group.- Investors
Rules of standard dealing with morality in the business environment.
Solution:
Rules of standard dealing with morality in business environment.- Business ethics
An activity motivated by profit.
Solution:
An activity motivated by profit. - Business
Earning foreign exchange is the responsibility of the organization towards this group.
Solution:
Earning foreign exchange is the responsibility of the organization towards this group.- Government
Employment generation is the responsibility of the organization towards this group.
Solution:
Employment generation is the responsibility of the organization towards this group.
- Society.
State whether the following statement is true or false.
Businessmen are trustees of the society.
True
False
Business ethics is a code of conduct.
True
False
The commercial organization is expected to uplift the weaker section of society.
True
False
It is the responsibility of the commercial organizations to maintain industrial peace.
True
False
Owners should not get complete and accurate information about the financial position.
True
False
The media does not play important role in public life.
True
False
Social responsibility is broader than the legal responsibility of business.
True
False
Find the odd one.
Job security
health and safety measures
good working condition
reasonable profit
Good quality products
fair prices
honest advertising
prevent congestion in cities
Timely payment of taxes
earning foreign exchange
creating goodwill
political stability
Protection of environment
maintain transparency
employment generation
development of the backward region
The proper conduct of the meeting
careful use of capital
fair prices of products
maintain solvency and prestige
Complete the sentence.
Business organisation can maximize profitability by ____________ wastage.
Solution:
A business organisation can maximize profitability by Minimizing wastage.
Social responsibility is broader than ____________ responsibility.
Solution:
Social responsibility is broader than Legal responsibility.
The concept of trusteeship was propounded by ____________.
Solution:
The concept of trusteeship was propounded by Mahatma Gandhi.
Business should earn ____________ profit.
Solution:
The business should earn Reasonable profit.
____________ should be fixed according to the nature and importance of work.
Solution:
Remuneration should be fixed according to the nature and importance of work.
The word 'Ethics' is derived from the Greek word ____________
Solution:
The word 'Ethics' is derived from the Greek word ' Ethos.
Select the correct option.
(Responsibilities towards shareholders, responsibilities towards consumers, Responsibilities towards the government, Responsibilities towards society)
Solution:
Answer in one sentence.
Who can raise voice against business malpractices?
Solution:
Media can raise voice against business malpractices and exploitation of consumers.
What should be done by management to keep workers updated?
Solution:
Management should make every possible attempt to educate and train employees to keep them updated.
What type of advertising should be avoided?
Solution:
The false, misleading, and vulgar advertisement should be avoided.
What organization should do to improve the quality of goods and to reduce the cost of production?
Solution:
The organization should conduct research and development to improve the quality of goods and to reduce the cost of production.
Correct the underlined word and rewrite the sentence.
Social responsibility is a narrower term than legal responsibility of business.
Solution:
Social responsibility is broader term than the legal responsibility of business.
All sorts of fair practices related to stock exchange should be avoided.
Solution:
All sorts of unfair practices related to stock exchange should be avoided.
Management and union should agree strikes and lockouts protect the interest of both the parties.
Solution:
Management and union should ban strikes and lockouts to protect the interest of both parties.
MRP (Maximum Retail Price) should not be printed on every packet.
Solution:
MRP (Maximum Retail Price) should be printed on every packet.
Dishonest advertising can be appreciated by customers in the long run.
Solution:
Honest advertising can be appreciated by customers in the long run.
Financial help should be provided by business organizations for anti-social activities.
Solution:
Financial help should not be provided by business organizations for anti-social activities.
Business ethics is a compulsory term.
Solution:
Business ethics is a voluntary term.
Business ethics is not a relative term.
Solution:
Business ethics is a relative term.
Social values are based on perceptions of right or wrong.
Solution:
Moral values are based on perceptions of right or wrong.
Moral values provide general guidelines for social conduct.
Solution:
Social values provide general guidelines for social conduct.
Explain the following term/concept.
Social responsibility
Solution:
Social responsibility of business refers to its obligation to make those decisions and perform those actions which are desirable in terms of the objectives and values of our society. So, all the activities of the business should be performed in such a manner that they will not harm any part of society rather they will protect and contribute to the interest of society.
Concept of Trusteeship
Solution:
Trusteeship is a socioeconomic philosophy that was propounded by Mahatma Gandhi. It provides a means by which the wealthy people would be the trustees of trusts that looked after the welfare of the people in general. Businessmen are considered to be trustworthy in society.
Business ethics
Solution:
The word 'Ethics' is derived from the Greek word 'Ethos' which means character. Ethics means the set of rules and principles that the organization should follow while the business ethics refer to a code of conduct that businesses are expected to fo1low while doing business.
Moral Values
Solution:
Moral values are based on perceptions of right and wrong whereas social values may also include ideas about things being socially acceptable. Social values are often based on tradition, ego, honesty, integrity fairness, hard work, cooperation, forgiveness, never hurt anyone, etc.
Social values
Solution:
Social values form an important part of the culture of the society. They provide general guidelines for social conduct. Values such as fundamental rights, patriotism, respect for human dignity, rationality, sacrifice, equality, democracy, etc. influence our behavior in many ways.
Study the following case/situation and express your opinion.
Yashwant Co. Ltd. is providing facilities for their female staff like a daycare center for kids and work from home facility. Even management takes their suggestions while taking the decisions though they are members of trade union
i) By doing this they are following social responsibilities towards which interest groups?
ii) What values are they presenting?
iii) What kind of responsibilities employer follows in the above case?
Solution:
By treating the staff with dignity and respect the company follows the social responsibilities towards the employees.
Yashwant Co. Ltd. is presenting social values by showing co-operation to their female staff.
Management takes the employee's suggestions while taking decisions even though they are members of a trade union. By doing this, management recognizes the right of employees to join Trade Unions. The company also does not restrict employees from forming Trade Union. Thus they follow social responsibility towards employees.
Organization manufacturing paint has been enjoying a prominent market position for many years. It has been dumping its untreated poisonous waste on the riverbank: which has created many health problems for the nearby villages.
i) Which responsibility is neglected by the manufacturing organizations?
ii) What kind of pollution they are doing?
iii) What precautionary measures do they need to take?
Solution:
Responsibility towards the protection of the environment is neglected by manufacturing industries.
They are creating water pollution by dumping its untreated poisonous waste on the river bank.
Proper waste management techniques should be adopted by the organization under which waste should be reduced, effort should be made to reuse the waste. Waste that cannot be reduced or reused should be recycled.
A vehicle manufacturing company has adopted the following practices.
A) Only those components will be used by the company which is environment friendly.
B) There will be a discharge of harmful wastes only after their proper treatment.
C) The pollution level of every vehicle will be maintained as per international standards.
i) By doing this, the business organization follows social responsibility towards which interest group?
ii) What kind of pollution do they want to avoid?
iii) What kind of message do they want to convey?
Solution:
The business organization follows social responsibility towards society for the protection of the environment.
They want to avoid air pollution.
They want to convey the message that businesses should be committed to protecting the environment and should not create an imbalance in nature.
Answer in brief.
What is business ethics?
Solution:
The word 'Ethics' is derived from the Greek word 'Ethos' which means character.
Ethics means the set of rules and principles that the organization should follow while the business ethics refer to a code of conduct that businesses are expected to follow while doing business.
Through ethics, a standard is set for the organization to regulate their behavior. This helps them in distinguishing between the wrong and the right path of the business. Ethics is a branch of social science.
What are the elements of business ethics?
Solution:
Elements of business ethics are as follows:
Code of conduct:
Business ethics is a code of conduct. It tells what to do and what not to for the welfare of the society. All businessmen must follow this code of conduct.
Based on moral and social values:
It contains moral and social principles (rules) for doing business. This includes self-control, consumer protection, and welfare, service to society, fair treatment to the social groups not to exploit others, etc.
Gives protection to social groups:
Business ethics give protection to different social groups such as consumers, employee small businessmen, government, shareholders, creditors, etc.
Provides basic framework:
It gives the social, cultural, economic, legal, and other limits of business. Business must be conducted within these limits.
Voluntary:
The businessmen must accept business ethics on their own. Business ethics must be like self-discipline. It must not be enforced by law.
Requires education and guidance:
Businessmen must be given proper education and guidance before introducing business ethics. The businessman must be motivated to implement business ethics.
Relative term:
Business ethics change from business to business. It also changes from one country to another. What is considered good in one country may be banned in another country.
New concept:
Business ethics is a newer concept. It is strictly followed only in developed countries and not in poor and developing countries.
State responsibilities of business towards the government.
Solution:
Responsibilities Towards Government:
The following are the responsibilities of the organization towards the government.
Timely Payment of Taxes:
The government imposes various types of taxes like sales tax, income tax, wealth tax etc. Business units should pay these taxes from time to time. It would be difficult for the government to undertake development projects without availability of funds.
Observing rules and regulations:
The rules framed by the government for business should be fully complied with. The business should follow the laws regarding obtaining a license for a specified business, the operation of the business, price determination and production, etc. They should conduct business in a lawful manner.
Earning Foreign Exchange:
The government also expects from a business organizations that it will earn foreign exchange by exporting goods. The government requires this foreign exchange for importing various goods. valuable and important products.
Economic Development:
The government sets the targets for the balanced and rapid economic development of the country.
The business organization should provide necessary cooperation to the government.
Implementing Socio-Economic Policies:
The government expects cooperation and help from the business sector in implementing socio-economic programs and policies.
Suggestions to the Government:
The business organization can provide suggestions to the government before framing important policies such as Industrial Policy, Import-Export Policy, Licensing Policy, etc. Such suggestions are helpful for framing organization-friendly policies.
No favors:
The commercial organization should not take any favor from the government officials by bribing or influencing them.
Contributing to Government Treasury:
The Commercial organization must contribute the funds to the government during the emergencies and natural calamities like floods, earthquakes, etc.
State any four CSR activities.
The following are some of the CSR activities.
Eradicating hunger, poverty & malnutrition, promoting preventive health care & sanitation & making available safe drinking water.
Promoting education, including special education & employment enhancing vocation skills, especially among children, women, elderly & the differently-abled & livelihood enhancement projects.
Employment enhancing vocational skills.
Measures for the benefit of armed forces veterans, war widows & their dependents.
Rural development projects, etc
Slum area development.
Justify the following statement.
The role of the media has a major influence on business organizations.
Solution:
Media refers to the various means used by advertisers to inform the public about the products or services. The mass media include the press, social media, radio, and television. Active media plays a crucial role in the life of the people. Through the internet, the reach of social media to common people has become very easy.
Media has the efficiency to disburse any information, wrong policy, unfair trade practice adopted by any business organization at a very fast pace to the public at large that too at every corner of the world. The media is very vibrant and active.
Media connects the people and creates an influence on the masses. It can make propaganda (or raise voice) against business malpractices and exploitation of consumers. It can do publicity through the repetition of messages by different means.
Newspapers, radio, television, the internet, social media, etc. can easily give publicity to unfair practices of business organizations. So, the media makes business organizations understand social values and exerts major influence.
The business should allow workers to participate in management.
Solution:
Workers are the real architects of success in any business unit. Investments in human resources (capital) gives rich rewards in the long run.
The success and failure of the business organizations to a greater extent depend on the support and participation of employees. Therefore, business organizations should encourage workers to participate in management through various schemes like giving suggestions, saving costs. quality circles, profit sharing co-ownership, etc.
When workers are given the opportunity to participate in the management, it will raise their morale. This in turn will give the workers a sense of belongingness. They will take an active part in the completion of the work assigned to them.
Workers' participation in management enables the organization to win the confidence of employees. It creates and maintains a good, healthy, and improved relationship between labor and management which is necessary for the success of any organization.
Expectations of society towards business are changing.
Solution:
Today the world is changing and expanding very fast. Social demands have changed gradually over the years. The business has to respond to them positively.
Now the people all over the globe are well aware of their rights. The overall knowledge level has also increased. In order to fulfill the growing needs of the people, the business firm must operate as per the expectations of society. Business units must give society what it actually wants.
Consumer satisfaction is the ultimate purpose of business activities. A business organization must give priority to consumer satisfaction over profit motive. Its survival, progress, and reputation depend upon consumer satisfaction. It must win the confidence of its customers by giving them useful services.
Business organizations are expected to action broad public interest and serve the objectives of mankind and society at large along with the objectives of earning profit. It must provide quality products to society at reasonable prices and above all contribute to social welfare.
Business organizations should avoid environmental pollution and ecological imbalance.
Solution:
The functioning of business units and industrialization creates air, water, and sound pollution. The carbon particles, dust, harmful gases, chemicals, etc. create air pollution.
Harmful chemicals, untreated sewage, industrial waste, fertilizers, pesticides, refuse, e-waste, etc. when get mixed with water, creates water pollution. Airplanes, motor vehicles, construction machines, and industrial equipment create sound pollution.
The business organizations are expected to take all possible measures to prevent air, water, and sound pollution and to maintain the ecological balance. For the well-being of society, every organization should assist the concerned organizations engaged in pollution control programs such as plantation of trees, preservation of wildlife, and natural resources.
Protecting the environment and maintaining the ecological balance in the following manner:
(i) Business organizations save costs and money by minimizing waste.
(ii) Business organizations that follow green practices (plantation of more and more trees) get support from customers.
(iii) Business organizations that take precautions to protect the environment create awareness amongemployees.
(iv) Protection of the environment process cut carbon emissions and create conditions for green growth which is beneficial to society.
(v) Business organizations showing awareness of environment protection get support and encouragement from the government. Thus, business organizations should avoid environmental pollution and ecological imbalance.
All sorts of unfair practices related to stock exchange should be avoided.
Solution:
The persons who provide finance for the short term as well as for the long term to the company are called owners or investors. They invest their money and accept the risk factors. Management is expected to provide full and factual information about the financial performance of the company to the owners and investors.
The Securities and Exchange Board of India (SEBI) plays a pivotal role in regulating and maintaining the interests of investors in the securities market. Law prohibits any sort of activity that is manipulative or unfair in the securities market. Thus, business organizations must avoid unfair practices related to stock exchange like insider trading providing wrong and secret information about buying/selling or dealing with securities, etc. Any breach in the above-mentioned practices may be considered unlawful and be made accountable by SEBI.
Therefore, a business organization should consider responsibilities toward the owners and should avoid all sorts of unfair practices related to the stock exchange.
Business ethics contains moral and social values for doing business.
Solution:
Business Ethics refers to the code of conduct that a business organization is expected to follow while doing business. According to "Wheeler', "Business ethics is an art or science of maintaining a harmonious relationship with society, its various groups, and institutions as well as recognizing the moral responsibility for right or wrong conduct of business.' "
Moral values are based on perceptions of right and wrong. They provide the general guidelines for distinguishing between wrong and right path of business, between good and bad, fair and unfair, just and unjust, legal and illegal, proper and improper in respect to human actions. Ethics contain moral values for doing business, Honesty, transparency, fairness, integrity, etc. are moral values that create goodwill and gives an economic gain in the long run.
Social values form an important part of the culture of the society. They provide general guidelines for social conduct. Values such as fundamental rights, patriotism, respect for human dignity, rationality, sacrifice, equality, democracy, etc. influence our behavior in many ways. These social values made the business socially acceptable. As business is a part of society, it can be successful in the long run by adopting social values.
Business ethics can be considered as a tool for social development.
Solution:
Business ethics is a code of conduct that evolved for regulating the activities of business towards society and others.
It calls for the importance of fair treatment to be given to the consumers, workers, suppliers, shareholders, competitors, government, and the community at large. Business ethics promote the principles of honesty, sincerity, fairness, justice in business dealings.
It protects the interests of all the constituents of society. It creates a healthy and competitive business atmosphere. It induces businessmen to introduce social security and welfare measures.
The businessmen promote activities enhancing the cultural values of the society. Thus, business ethics, if practiced by businessmen in the right spirit, can be considered as a tool for social development.
Attempt the following.
What is the social responsibility of commercial organizations? towards consumers?
Solution:
social responsibility of the commercial organizations. towards consumers are as follows:
Good Quality Products:
The organization should produce quality goods. Every organization should have its quality control department so inferior and substandard products can be rejected. International Standard Organization (ISO), is the latest trend towards quality control. This ensures customers about quality products.
*Fair Prices:
The consumers should not be cheated by charging high prices. It is not possible to fool the customer at all the time. Fair price converts a one-time consumer into a permanent consumer. Maximum Retail Price (M.R.P.) inclusive of all taxes should be printed on every packet. The retailer should not charge any extra amount.
Customer's Safety:
The business must ensure that the product supplied will not adversely affect the life and health of the customers. Unsafe products should not be marketed. The consumer should be warned of any unsafe goods.
Honest Advertising:
The consumers want to know the facts, features, advantages, side-effects, etc. of the products. The advertisement conveys this information. So the organization must be sure that the advertisement is not being misleading. The false, misleading, and vulgar advertisement should be avoided. Consumers will appreciate only honest advertisements in the long run.
After Sales Service:
The organization is expected to provide after-sales service for the maintenance of goods during the period of warranty. Efficient and effective after-sale service helps to establish a good relationship between the consumers and the organization.
Research and Development:
Organization should conduct research and development to improve the quality of goods and to reduce the cost of production. This will minimize the final prices charged to consumers. It must provide quality standards such as BIS or AGMARK on respective products.
Regular Supply:
Consumers should be supplied with the goods regularly as and when required by them. The commercial organization should not create an artificial shortage of goods by hoarding and black marketing.
Attend Complaints:
Consumer complaints must be attended immediately. A quick and effective grievances redressal system should be implemented. Suggestions for customers should be welcomed.
Training:
The business organization should arrange training for their consumers either free or by charging reasonable fees.
Avoid Customer Exploitation:
The business should avoid unfair trade practices which lead to exploitation of consumers. Also, they should avoid monopolistic competition in the interest of consumers.
Attempt the following.
State different types of responsibilities towards society. (OR)
Explain the responsibilities of a business unit towards society at a large.
Solution:
A business organization has certain responsibilities towards the society at a large they are as under
Protection of the environment:
Pollution is the major problem of present times. Air pollution and water pollution are due to industries, chemical plants, cement plants, etc. The business organization should take all possible measures to minimize pollution.
Better and Maximum Use of Resources:
The business organization should make proper and optimum use of scarce resources. The resources like fuel, water, land, etc. must be used efficiently.
Reservation for Weaker Section: The organization is expected to reserve certain positions in their establishment for economically weaker sections of the society to lift up the economically weaker section of the society. These people expect financial and other help from the business unit; which will be provided time to time.
Development of Backward Regions:
The society requires that the business organization should be started in backward areas. This will create employment opportunities and increase purchasing power among the rural people. Thereby, helping backward regions to develop.
Protest against Anti-Social Activities:
Business organizations should not participate in anti-social activities. It will adversely affect society. No financial help should be provided for that. Smuggling, association with underworld people, bribing government people should be avoided.
Financial Assistance:
Society expects donations and financial assistance for various social causes such as eradication of poverty, illiteracy, etc. They expect the business organizations to provide financial assistance to various awareness programs such as anti-drug campaigns, antinomies pollution campaigns, etc.
Prevent Congestions:
The business should avoid the congestion of industries in cities by spreading industries in different places or locations. Industries should be preferably located in industrial zones only. It will avoid adverse effects on residential areas.
Employment Generation:
The business should provide large employment opportunities for all sections of society. It can be done through expansion and diversification programs. Such an effort will help to solve the problem of unemployment, poverty in society.
Answer the following.
What are the responsibilities of business towards the Investors?
Solution:
Responsibilities Towards Investors:
Investors provide finance to the company. They are creditors of the business. Businesses should fulfill the following responsibilities towards investors.
Proper Conduct of Meetings:
The company should call meetings of investors and provide information about the business. Proper notices of the meeting should be sent to them. In a period of crisis, investors should be taken into confidence. Factors responsible for failure should be known to the investor.
Return on Investment:
Investors invest their money in business and accept risk factors. They should get fair returns on investment regularly in the form of interest. The following points should be considered
a. Fair returns on investment
b. Safety of investment.
c. Steady appreciation of business.
Handling Grievances:
A company should handle investor's grievances if any. There should be an effective methodology for this. All queries regarding any other issue must be answered in a satisfactory way.
Maintain Transparency:
Investors provide long term capital as well as working capital to run the business efficiently. So it should maintain a high degree of transparency in its operation.
Proper Disclosure of Information:
Management should present full and factual information to investors. They should get regular reports, circulars, and statements of profit. The financial performance of the company must be provided correctly so that prospective investors can make the right decisions to invest in the future. All of this will ensure that their investment is safe.
Maintain Solvency and Prestige:
Businesses should maintain a sound financial position, solvency, prestige, and goodwill to satisfy investors. Businesses should make continuous efforts for research, innovation, and expansion programmes..
What are the responsibilities of business towards the government?
Solution:
Responsibilities Towards Government:
The following are the responsibilities of the organization towards the government.
Timely Payment of Taxes:
The government imposes various types of taxes like sales tax, income tax, wealth tax, etc. Business units should pay these taxes from time to time. It would be difficult for the government to undertake development projects without the availability of funds.
Observing rules and regulations:
The rules framed by the government for business should be fully complied with. The business should follow the laws regarding obtaining a license for a specified business, the operation of the business, price determination and production, etc. They should conduct business in a lawful manner.
Earning Foreign Exchange:
The government also expects from a business organizations that it will earn foreign exchange by exporting goods. The government requires this foreign exchange for importing various goods. valuable and important products.
Economic Development:
The government sets the targets for the balanced and rapid economic development of the country. The business organization should provide necessary cooperation to the government.
Implementing Socio-Economic Policies:
The government expects cooperation and help from the business sector in implementing socio-economic programs and policies.
Suggestions to the Government:
The business organization can provide suggestions to the government before framing important policies such as Industrial Policy, Import-Export Policy, Licensing Policy, etc. Such suggestions are helpful for framing organization-friendly policies.
No favors:
The commercial organization should not take any favor from the government officials by bribing or influencing them.
Contributing to Government Treasury:
The Commercial organization must contribute the funds to the government during emergencies and natural calamities like floods, earthquakes, etc.
