Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 6 Social Responsibilities of Business and Business Ethics Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.
Social Responsibilities of Business and Business Ethics NCERT Solutions for Class 11 Business Studies Chapter 6
Social Responsibilities of Business and Business Ethics Questions and Answers Class 11 Business Studies Chapter 6
Social responsibility is:
(a) Same as a legal responsibility
(b) Broader than legal responsibility
(c) Narrower than legal responsibility
(d) None of them
(b) Broader than legal responsibility
If the business is to operate in a society which is full of diverse and complicated problems. It may have
(а) Little chance of success
(b) Great chances of success
(c) Little chance of failure
(d) No relation with success or failure
(а) Little chance of success
Business people have the skills to solve –
(a) All Social Problems
(b) Some Social problems
(c) No social problems
(d) All economic problems
(d) All economic problems
That an enterprise must behave as a good citizen is an example of its responsibility.
Environmental protection can best be done by the efforts of –
(a) Business People
(d) All the people
(d) All the people
Carbon monoxide emitted by automobiles directly contributes to –
(a) Water Pollution
(b) Noise Pollution
(c) Land Pollution
(d) All the people
(d) All the people
Which of the following can explain the need for pollution control?
(a) Cost savings
(b) Reduced risk of liability
(c) Reduction of health hazards
(d) All of them.
(d) All of them.
Which of the following is capable of doing maximum good to society?
(a) Business Success
(b) Laws and Regulations
(d) Professional Management
Ethics is important for –
(a) Top Management
(b) Middle Level Managers
(c) Non-managerial employers
(d) All of them.
(a) Top Management
Which of the following alone can ensure effective ethic programme in a business enterprise?
(a) Publication of code
(b) Involvement of employees
(c) Establishment of compliance mechanism
(d) None of them
(c) Establishment of compliance mechanism
Short Answer Questions
What do you understand by social responsibility of a business? How is it different from legal responsibility?
- Social responsibility of business refers to its obligations to make those decisions and perform those actions which are desirable on terms of the objectives and values of our society.
- Social responsibility of business refers to a voluntary obligation on the part of business concerns to contribute for the welfare of society.
- Social responsibility refers to any business concerns, not only protecting its own interest such as making a profit, it protecting the interest of different groups of society like as owner, investors, consumers, employee, government and society.
What Is environment? What is environmental pollution?
Environment (Meaning) — Environment is defined as the sum total of all conditions and influences that affect the life and development of organisms. It includes the non-living things also like to pography of area, climate including light, temperature, rainfall etc.
Business and environmental protection – The health and well being of people and other living creatures depends to a great extent on the quality of environment in which they live and work. Rapid industrialisation and growing traffic have caused a great damage to the environment. Forests, wildlife and other desirable elements in the environment are declining very fast to accommodate growing population and industry and commerce.
This damage to the environment has contributed to increasing disease and disaster. All types of pollution air, water, noise are rapidly growing. Governments in various countries (including India) have enacted laws to prevent pollution of air and water. Pollution control boards have also been set up by Central and State Governments. But laws alone is not sufficient for controlling pollution.
Environmental pollution is of seven types – Air pollution, water pollution, soil pollution, noise pollution, thermal pollution and nuclear pollution. The rapid unplanned industrial progress added to our pollution problem. Today, the cry of pollution is heard from all the nooks and comers of the globe, and pollution has become a real threat to very existence of mankind on the earth. It is the major challenge in this time.
What is business ethics? Mention the basic elements of business ethics.
‘Ethics’ is a Greek word meaning character; norms, ideals, or morals prevailing in a group or society. Business ethics refers to the relationship between business objectives, practices, techniques, and the good of society. It is concerned with the socially determined moral principles which should govern business activities.
Top management commitment:
- Publication of a ‘Code’.
- Establishment of a compliance mechanism.
- Involving employees at all levels.
- Measuring results.
(a) Air pollution
(b) Water pollution and
(c) Land pollution.
(a) Air pollution – Air pollution is the result of combination of factors which lowers the air quality. It is mainly due to carbon monoxide emitted by automobiles. The use of chemicals in industries and air pollution caused by industries have created a hole in the ozone layer. This produces greenhouse effect which means a dangerous warming of the earth. It is the responsibility of business to check the use of industrial chemicals and take effective steps to control air pollution.
(b) Water pollution-Carefulness disposal of industrial wastes and effluents has caused the problem of water pollution. This has led to the death of animals in several cases and also posed a threat to human life. Several diseases are reported to have been caused by water pollution.
Thus, it should be obligatory for every industrial unit to take steps to check water pollution. They should adopt scientific methods to dispose of waste and affluents and clean the polluted water through water treatment plants before disposing of the water in drains, canals or rivers. Water pollution had led to the death of several animals and posed a serious threat to human life.
(c) Land pollution – Dumping of toxic wastes in the land causes land pollution. This might damage the quality of land making it unfit for agriculture. In order to check land pollution, solid waste disposal methods should be used by the industrial organisations. The combustible wastes should be separated and used as fuels in industrial boilers.
What are the major areas of social responsibility of business?
Social responsibility has an element of voluntary action on the part of the business person to perform social responsibilities.
The case for social responsibility – Business is expected to be responsible to society due to the following reasons :
(1) Self-interest – Business exists for providing goods and services to satisfy human needs. Though, profit motive is an important justification for business activity but in the long-term, it is in the interest of business to assume social obligations.
Enlightened businessmen recognise that they can succeed better by fulfilling the demands and aspirations of society. People who have had a higher standard of living and have been exposed to an environment conducive to healthy growth make better employees and customers for business than those who are poor, ignorant and oppressed. For example, provision of higher wages and good working conditions motivates workers to work hard and produce more. In fact, the prosperity and growth of business is possible only through continuous service to society.
(2) Creation of society – Business is a creation of society and uses the resources of society. Therefore, it should fulfill obligations to society. Businessmen should respond to the demands of society and should utilise the social resources at their command for the benefit of the people. In the long run a successful business can be built on the foundations of a happy community and a satisfied workforce. Social responsibility by business provides justifications for its existence and growth.
(3) Social power – Businessmen have considerable social power. Their decisions and actions affect the lives and fortunes of all of us. They collectively determine for the nation such important matters as amount of employment, rate of economic progress and distribution of income among various groups.
Businessmen should assume social obligations commensurate with their social power. Otherwise, their social power will be taken away by the society through government controls and other regulations. It is, therefore, the moral and right thing for business enterprises to assume social obligations. Therefore, it is in the interest of business to fulfil social responsibilities in order to improve the image of business when it supports social goals.
(4) Public image-A business can improve its image in public by assuming social obligations. Good relations with workers, consumers and suppliers help in the success of business. Social obligations improve the confidence and faith of people in a business enterprise.
(5) Social awareness – No business can be done in isolation from society. It is the society that permits business to exist and grow. Nowadays consumers and workers are well informed about their rights. Consumers expect better quality products at reasonable prices. Similarly, workers desire fair wages and other benefits. They exercise pressure on the employers through trade unions. If business does not fulfil its obligations, there will be industrial unrest and conflict in society. A society with fewer problems provides better environment for a firm to conduct its business.
(6) Free enterprise If businessmen do not accept and discharge their social obligations they will lose their freedom. For example, the government has passed the Consumer Protection Act to prevent businessmen from indulging in adulteration, black marketing and other anti-social practices.
Thus, social responsibilities are essential for avoiding governmental action against business. Such action will reduce the freedom of decision matting in business. Business enterprises have started realising the fact that social interest and business interest are not contradictory. Instead, these are complementary in nature.
(7) Law and order – Business can survive and grow only when there is law and order in society. Every business has a responsibility to operate within the laws of the land. Since these laws are meant for the good of the society, a law abiding enterprise is a socially responsible enterprise as well.
(8) Moral justification – In a large country like India, government alone cannot solve all Hie problem -. Business has money and talent with which it can assist the government in solving which it can assist the government in solving problems.
For example, business can play a vital role in solving regional disparities, unemployment illiteracy, scarcity of foreign exchange and such other problems in the country. Moreover, business has created some problems such as pollution. Therefore, business should help society in solving its problems.
(9) Socio-cultural Norms – India has a rich cultural heritage. Businessmen who help in preserving and promoting this heritage will naturally enjoy the patronage of the society and the government. Business should, therefore, promote equality of opportunity, healthy relations with employees and customers, etc.
(10) Professionalisation – Management of business enterprises is being professionalised. An owner-manager nurses a greater greed for profiteering because all the gains go to him. But a salaried and qualified manager is loss likely to be lured because he does not benefit from the profits earned through questionable practices.
(11) Trusteeship – Mahatma Gandhi suggested that “those who own money or property should hold and use it in trust for society”. Businessmen should run business firms not for their self-enrichment but for the good of the society.
Long Answer Questions
Build up arguments for and against social responsibility.
Arguments for Social Responsibility:
(i) Justification for existence and growth:
Business exists for providing goods and services to satisfy human needs. Though profit motive is an important justification for undertaking the business activity, it should be looked upon as an outcome of service to the people. In fact, the prosperity and growth of the business are possible only through continuous service to society. Thus, the assumption of social responsibility by businesses provides justifications for their existence and growth.
(ii) Long-term interest of the firm:
A firm and its image stand to gain maximum profits in the long run when it has its highest goal as ‘service to society’. When increasing number of members of society including workers, consumers, shareholders, government officials, feel that business enterprise is not serving its best interest, they will tend to withdraw their cooperation to the enterprise concerned. Therefore, it is in its own interest if a firm fulfills it’s social responsibility. The public image of any firm would also be improved when it supports social goals.
(iii) Avoidance of government regulation:
From the point of view of a business, government regulations are undesirable because they limit freedom. Therefore, it is believed that businessmen can avoid the problem of government regulations by voluntarily assuming social responsibilities, which helps to reduce the need for new laws.
(iv) Maintenance of society:
The argument here is that laws cannot be passed for all possible circumstances. People who feel that they are not getting their due from the business may resort to anti-social activities, not necessarily governed by law. This may harm the interest of business itself. Therefore, it is desirable that business enterprises should assume social responsibilities.
(v) Availability of resources with business:
This argument holds that business institutions have valuable financial and human resources which can be effectively used for solving problems. For example, business has a pool of managerial talent and capital resources, supported by years of experience in organising business activities. It can help society to tackle its problems better, given the huge financial and human resources at its disposal.
(vi) Converting problems into opportunities:
Related with the preceding argument is the argument that business with its glorious history of converting risky situations into profitable deals, can not only solve social problems but it can also make them effectively useful by accepting the challenge.
(vii) Better environment for doing business:
If business is to operate in a society which is full of diverse and complicated problems, it may have little chance of success. Therefore, it is argued that the business system should do something to meet needs before it is confronted with a situation when its own survival is endangered due to enormous social illnesses. A society with fewer problems provides be ‘ r environment for a firm to conduct its business.
(viii) Holding business responsible for social problems:
It is argued that some of the social problems have either been created or perpetuated by business enterprises themselves. Environmental pollution, unsafe workplaces, corruption in public institutions, aid discriminatory practices in employment are some of these problems. Therefore, it is the moral obligation of business to get involved in solving these problems, instead of merely expecting that other social agencies will deal with them on their own.
Arguments against Social Responsibility Major arguments against social responsibility are:
1. Violation of profit maximisation objective:
According to this argument, business exists only for profit maximisation. Therefore, any talk of social responsibility is against this objective. In fact, business can best fulfill its social responsibihty if it maximises profits through increased efficiency and reduced costs.
2. Burden on consumers:
It is argued that social responsibilities like pollution control and environmental protection are very costly and often require huge financial investments. In such circumstances, businessmen are likely to simply shift this burden of social responsibihty by charging higher prices from the consumers instead of bearing it themselves. Therefore, it is unfair to tax the consumers in the name of social responsibihty.
3. Lack of social skills:
All social problems cannot be solved the way business problems are solved. In fact, businessmen do not have the necessary understanding and training to solve social problems. Therefore, according to this argument, social problems should be solved by other, specialized agencies.
4. Lack of broad public support:
Here the argument is that the public in general does not like business involvement or interference in social programmes. Therefore, business cannot operate successfully because of lack of public confidence and cooperation in solving social problems.
Discuss the forces which are responsible for increasing concern of business enterprises towards social responsibility
Responsibilities towards different interest groups – As a socio-economic institution, business comes into contact with several groups such as shareholders, employees, customers, the government, community, suppliers, competitors, etc. Business is responsible to all these interest groups.
(1) Responsibilities towards owners and investors – A business enterprise has the responsibility to provide a fair return to shareholders or owners on their capital investment and ensure the safety of their investment. To provide the shareholders the following informations in order to protect their investment:
- To ensure safety of investment;
- To provide a fair and regular dividend or interest;
- To offer reasonable appreciation of capital through optimum utilisation of resources;
- To provide regular, accurate and adequate information on the financial position of the company;
- To offer reasonable opportunities for participation of shareholders in policy decisions; and
- To give equal treatment to all shareholders.
(2) Responsibilities towards workers – The employees are the greatest asset of a business and their well-being is a matter of material advantage as well as moral obligation. Employees should be treated as honourable individuals who are justly rewarded, fairly encouraged, fully informed and properly assigned.
Their lives must be given meaning and dignity. A senseofpartnershipand belonging should be inculcated. They should be provided both economic and psychological satisfaction. The enterprise must respect the democratic rights of workers. Business has the following responsibilities towards its employees:
- To pay a regular wage or salary;
- To provide good working conditions;
- To ensure welfare facilities such as housing, medical care, social security, recreation, etc.;
- To provide opportunities for education and self-development;
- To develop a sense of belonging and dignity of labour; and
- To guarantee freedom of religion and political views.
(3) Responsibilities towards customers – Supply of right quality and quantity of goods and services to consumers at reasonable price is the responsibility of business. The responsibilities of business towards its customers are given below :
- To supply socially useful products that meet the needs of customers;
- To ensure regular and adequate supply of products;
- To provide goods of standard quality:
- To charge fair prices;
- To provide prompt and courteous service;
- To ensure a fairly wide distribution of products during shortage;
- To handle consumers’ complaints and grievances quickly;
- To supply useful information about new products and new uses of existing products;
- To avoid unfair trade practices such as adulteration, hoarding, black marketing, false advertising, under weighing, etc.and
- To provide benefits of cost reduction in the form of lower prices.
(4) Responsibilities towards government – An enterprise must behave as a good citizen and act accordingly to the well-accepted values of the society. Business has the following responsibilities towards the government:
- To abide by the laws of the land;
- To pay taxes promptly and regularly;
- To cooperate with the state in solving national problems such as poverty, over-population, illiteracy, concentration of economic power, backward regions, etc.;
- To adopt dealings in foreign trade in order to maintain the country’s image.
- To refrain from corrupt public servants and the democratic process; and
- To avoid monopolistic and restrictive trade practices.
(5) Responsibilities towards the community and public – Every business owes an obligation to the local community and general public or society. It should improve the quality of life and contribute towards social welfare. The main responsibilities of business towards the public are as follows :
- To protect the environment from all types of pollution;
- To make optimum utilisation of natural resources; e.g. energy conservation.
- To assist local bodies in providing amenities such as drinking water, sanitation, public transport etc.
- To provide more and more employment opportunities;
- To provide assistance to hospitals, religious institutions, educational institutions, sports bodies, etc.
- To preserve social and cultural values;
- To help the weaker sections of society such as disabled persons, orphans, widows, scheduled tribes, etc.
- To promote national integration; and
- To cooperate and be truthful with media about issues affecting public welfare.
(6) Responsibilities towards suppliers and competitors – Management should deal with the suppliers judiciously. lt should offer them fair terms and conditions regarding prices, quality, delivery of goods and payment. In the absence of fair dealings, the suppliers will not supply them the goods on credit. The business owes the follow ing responsibilities towards the suppliers:
- To make fair and regular payments to suppliers;
- To adopt fairtrade practices regarding price, quality and services;
- To protect and assist small-scale and cottage industries; and
- To patronise trade associations and chambers of commerce.
To sum up, the social responsibilities of business include high level of
employment, high standard of living, swift economic progress, economic stability and national security.
The interests of various groups are not always in harmony. It is the management’s task to strike an equitable balance among the conflicting interests. The management serves as an arbiter among the various interest groups. It is the duty of managers to divide the return from business equitably by providing a fair return to the investors, fair pay and working conditions to employees, good quality and fair prices to customers, fair prices to suppliers and also to serv e as an asset to the local community and the nation.
‘Business is essentially a social institution and not merely a profit-making activity.’ Explain.
A business enterprise is permitted by society to carry on industrial or commercial activities and earn profits from it. Therefore, a business enterprise is expected to do business and earn money in ways that fulfill the expectations of society. Like every individual living in society, business to has certain obligations towards society in terms of respect for social values and norms of behavior.
It is obligatory on part of the business enterprise not to do anything that is undesirable from society’s point of view. The manufacture and sale of adulterated goods, making deceptive advertisements, evading taxes, polluting the environment and exploiting workers are some examples of socially undesirable practices which may increase the profit of enterprises but which have adverse social effects.
On the other hand, supplying good quality goods, creating healthy working conditions, honestly paying taxes, prevention of pollution, and resolving customer complaints are examples of socially desirable practices which improve the image of enterprises leading to higher profits in the long run.
The major areas of social responsibility of business which explain that business is essentially a social institution and not merely a profit-making activity include the following:
When the business commences, the social objective of the firm is recognized and it is important for the organisation to know to whom and for what the business and its management are responsible. The major areas of social responsibilities of business include the following.
(i) Responsibility towards the shareholders or owners:
A business enterprise has the responsibility to provide a fair return to the shareholders or owners on their capital investment and to ensure the safety of such investment. The corporate enterprise on a company form of organisation must also provide the shareholders with regular, accurate and full information about its working as well as schemes of future growth.
(ii) Responsibility towards the workers:
Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work. It should try to create the right kind of working conditions so that it can win the cooperation of workers. The enterprise must respect the democratic rights of the workers to form unions. The worker must also be ensured of a fair wage and a fair deal from the management.
(iii) Responsibility towards the consumers:
Supply of right quality and quantity of goods and services to consumers at reasonable prices constitutes the responsibility of an enterprise toward its customers. The enterprise must take proper precaution against adulteration, poor quality, lack of desired service and courtesy to customers, misleading and dishonest advertising, and so on. They must also have the right of information about the product, the company and other matters having a bearing on their purchasing decision.
(iv) Responsibility towards the government and community:
An enterprise must respect the laws of the country and pay taxes regularly and honestly. It must behave as a good citizen and act according to the well-accepted values of the society. It must protect the natural environment and should avoid bad, effluent, smoky chimneys, ugly buildings dirty working conditions. It must also develop a proper image in society through continuous interaction with various groups of people.
Why does the enterprise need to adopt pollution control measures?
Need for pollution control – Pollution prevention or control is needed to preserve precious environmental resources and to improve the environment quality so that the preserved resources can be utilized for the benefit of mankind and improvement of health and well-being of the people.
Pollution spoils the quality of the environment and makes it unfit for a normal life. Air becomes harmful to breathe, water becomes unfit to drink and land becomes unfit to live on. The main reasons for pollution control are as follows :
(1) Reduction of health hazards – Environmental pollution is the main cause of cancer, heart and lung diseases. These diseases are now the leading causes of death in modern society. Air pollution is known to aggravate heart disease. Similarly, water pollution may cause liver and kidney diseases. Pollution control will help to reduce these health hazards by making the environment more conducive to healthy living.
(2) Reduced risk of liability- It is possible that an enterprise is held liable to pay compensation to people affected by the toxicity of gaseous liquid and solid waste it has released into the environment. Refineries and other industries cause pollution and create hazards. Control over pollution is necessary to reduce safety hazards. Therefore, it is necessary to install pollution control devices in their premises to reduce the risk of liability.
(3) To reduce nuisance-Air pollution creates personal discomfort such as irritation in eyes and difficulty in breathing. Similarly, water pollution makes swimming and fishing difficult. Pollution control is required to reduce such inconvenience.
(4) Cost savings – Pollution causes economic loss such as damage to vegetation and live-stock, spoiling of
buildings and works of art, spoiling of clothes which result increase in washing expenses. Control over environmental pollution will reduce such economic loss. Cost savings are particularly noticeable when improper production technology results in greater wastes such which leads to higher cost of waste disposal and cost of cleaning the plants.
(5) To ensure aesthetic pleasure – Pollution control is necessary to reduce noise so that normal conversation becomes possible, to reduce foul smell, to protect monuments such as Taj Mahal.
(6) Other social benefits – Pollution control results in many other benefits like clearer visibility, cleaner buildings, better quality of life, and the availability of natural products in a proper form.
What steps can an enterprise take to protect the environment from the dangers of pollution?
Since the quality of the environment is important for all of us, we have a collective responsibility to protect it from being spoiled. Whether it is government, business enterprises, consumers, workers, or other members of society, each one can do something to stop polluting the environment.
The government can enact laws to ban hazardous products. Consumers, workers, and members of society can avoid using certain products and doing things that are not environment-friendly. Business enterprises should, however, take the lead in providing their own solutions to environmental problems.
It is the social responsibility of every business to take steps not only to check all sorts of pollution but also to protect environmental resources. Business enterprises are leading creators of wealth, employment, trade, and technology. They also command huge financial, physical, and human resources.
They also have the know-how to solve environmental pollution problems with a preventive approach by controlling pollutants at the source. In most cases, modification or change in the process of production, redesign of equipment, substituting poor quality materials with better ones or other innovative approaches could greatly reduce or even eliminate pollution entirely. Some of the specific steps which can be taken by business enterprises for environmental protection are as stated below:
- A definite commitment by top management of the enterprise to create, maintain and develop a work culture for environmental protection and pollution prevention.
- Ensuring that commitment to environmental protection is shared throughout the enterprise by all divisions and employees.
- Developing clear-cut policies and programs for purchasing good quality raw materials, employing superior-technology, using scientific techniques of disposal and treatment of wastes, and developing employee skills for the purpose of pollution control.
- Complying With the laws and regulations enacted by the Government for the prevention of pollution
- Participation in government programmes relating to the management of hazardous substances, clearing up of polluted rivers, plantation of trees, and checking deforestation.
- Periodical assessment of pollution control programmes in terms of costs and benefits so as to increase the progress with respect to environmental protection.
- Arranging educational workshops and training materials to share technical information and experience with suppliers, dealers and customers to get them actively involved in pollution control programmes.
Explain the various elements of business ethics.
1. Top Management Commitment:
The top management has a crucial role in guiding the entire organization towards ethically upright behavior. To achieve results, the ChiefExecutive Officer (or CEO) and other higher-level managers need to be openly and strongly committed to ethical conduct.
2. Publication of a ‘Code’:
Enterprises with effective ethics programs define the principles of conduct for the whole organization in the form of written documents which is referred to as the “code”. This involves areas such as fundamental honesty and adherence to laws; product safety and quality; health and safety in the workplace etc.
3. Establishment of Compliance Mechanisms:
Company must ensure that actual decisions and actions comply with the firm’s ethical standards by establishing suitable mechanisms. Some examples of such mechanisms are: paying attention to values and ethics in recruiting and hiring; emphasizing corporate ethics in training; auditing performance regularly to analyze the degree of compliance; and instituting communication systems to help employees report incidents of unethical behavior.
4. Involving Employees at all Levels:
Involvement of employees in ethics programs is a must as at different levels they are the ones who implement ethics policies to make ethical business a reality. Although it is difficult to accurately measure the end results of ethics programs, the firms can certainly audit to monitor compliance with ethical standards. The top management team and other employees should then discuss the results for further course of action.
5. Measuring results:
Although it is difficult to accurately measure the end results of ethics programmes, the firms can certainty audit to monitor compliance with ethical standards. The top management team and other employees should then discuss the results for further course of action.