Chapter 6
Social Responsibilities of Business
Q1. (A) Select the correct option and rewrite the sentence.
1. Business is a ..................... activity
a) Socio-economic
b) Service
c) Charitable
2. Business organisation should try to make ..................... utilisation of natural resources.
a) Minimum
b) Maximum
c) Optimum
3. For economic growth and national security ..................... stability is required.
a) Political
b) Social
c) Economic
4. Making timely paymenet of proper taxes is the responsibility of organization towards .....................
a) Shareholders
b) Customers
c) Government
5. Businessmen are ..................... of the society.
a) Representatives
b) leaders
c) Trustees
6. Business should provide periodic information to ........... .
a) Customers
b) Owners
c) Employees
7. Business should offer adequate opportunities of promotion to their .........
a) Employees
b) Customers
c) Investors
8. The term 'Ethics' is derived from the ............. word 'Ethos' which means character.
a) Latin
b) French
c) Greek
9. Business ethics refers to the ..................... system of principles.
a) Economic
b) Social
c) Moral
10. Business organisation should protect health and provide safety measures to ........... .
a) employees
b) owners
c) investors
11. At least ..................... % of the average net profit should be spent on C.S.R.
a) 5%
b) 2%
c) 3%.
(B) Match the pairs.
(C) Give one word / phrase/ term for the following sentence.
1) Name the philosophy related to social responsibility propounded by Mahatma Gandhi.
2) Duties, obligations of business directed towards welfare of society.
3) Getting good quality products is the basic right of this group of society.
4) Providing fair returns on investment is the responsibility of organisation towards this group.
5) Rules of standard dealing with morality in business environment.
6) An activity motivated by profit.
7) Earning foreign exchange is the responsibility of the organisation towards this group.
8) Employment generation is the responsibility of the organisation towards this group.
(D) State whether following statements are true or false.
1) Businessmen are trustees of the society.
2) Business ethics is a code of conduct.
3) The commercial organisation are expected to uplift the weaker section of the society.
4) It is the responsibility of commercial organisation to maintain industrial peace.
5) Owners should not get complete and accurate information about the financial position.
6) Media does not play important role in public life.
7) Social responsibility is broader than legal responsibility of business.
(E) Find the odd one.
1) Job security, health and safety measures, good working condition, reasonable profit.
2) Good quality products, fair prices, honest advertising, prevent congestion in cities.
3) Timely payment of taxes, earning foreign exchange, creating goodwill, political stability.
4) Protection of environment, maintain transparency, employment generation, development of backward region.
5) Proper conduct of meeting, careful use of capital, fair prices of products. maintain solvency and prestige.
F) Complete the sentences.
1) Business organisation can maximise profitability by ............. wastage.
2) Social responsibility is broader than ............. responsibility.
3) The concept of trusteeship was propounded by ............. .
4) Business should earn ............. profit.
5) ........... should be fixed according to the nature and importance of work.
6) The word 'Ethics' is derived from the Greek word ' ............. .
(G) Select the correct option.
(Responsibilities towards shareholders, responsibilities towards consumers, Responsibilites towards government, Responsibilities towards society)
(H) Answer in one sentence.
1) Who can raise voice against business malpratices ?
2) What should be done by management to keep workers updated?
3) What type of advertising should be avoided?
4) What organisation should do to improve quality of goods and to reduce cost of production ?
(I) Correct the underlined word and rewrite the sentence.
1) Social responsibility is narrower term than legal responsibility of business.
2) All sorts of fair practices related to stock exchange should be avoided.
3) Management and union should agree strikes and lockouts to protect the interest of both the parties.
4) MRP (Maximum Retail Price) should not be printed on every packet.
5) Dishonest advertising can be appreciated by customers in the longrun.
6) Financial help should be provided by business organisation for anti social activities.
7) Business ethics is a compulsary term.
8) Business ethics is not a relative term.
9) Social values are based on perceptions of right or wrong.
10) Moral values provide general guidelines for social conduct.
Q.2 Explain the following terms/ concepts.
1) Social responsibility
Ans:
Social responsibility of business refers to its obligation to take those decisions and perform
those actions which are desirable in terms of the objectives and values of our society. So, all the activities of 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.
2) Concept of Trusteeship
Ans:
Concept of Trusteeship:
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 trustees of society.
3) Business ethics
Ans:
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 a 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 deals with concepts such
as right and wrong, good and bad, fair and unfair just and unjust, legal and illegal, proper and improper in respect of human actions. Ethics is a branch of social science
4) Moral Values
Ans:
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 et
5) Social values
Ans:
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
Q.3 Study the following case / situation and express your opinion.
1) Yashwant Co. Ltd. is providing facilities for their female staff like day care centre 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 above case?
2) An organization manufacturing paints has been enjoying a prominent market position since many years. It has been dumping its untreated poisonous waste on the river bank: which has created many health problems for the nearby villages.
i) Which responsibility is neglected by manufacturing organisation?
ii) What kind of pollution they are doing?
iii) What precautionary measures they need to take?
3) A vehicle manufacturing company has adopted the following practices.
A) Only those components will be used by the company which are environment friendly.
B) There will be discharge of harmful wastes only after their proper treatment.
C) Pollution level of every vehicle will be maintained as per international standards.
i) by doing this,business organisation 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?
Q.4. Answer in brief.
1) Give any four types of social responsibilities towards consumers.
2) What is business ethics? What are elements of business ethics?
Ans:
3) State responsibilities of business towards government.
Ans:
The government regulates and controls the business with the objectives of systematic economic
development of the country and safeguarding the interests of the common man. Government provides
incentives and subsidies to business. Following are the responsibilities of organization towards
government.
1) 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.
2)
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 license for a specified business, the operation of
the business, price determination and production etc. They should conduct business in lawful
manner.
3) Earning Foreign Exchange:
The government also expects from business organization that it will earn foreign exchange by
exporting goods. The government requires this foreign exchange for importing various goods.
valuable and important products.
4) Economic Development:
The government sets the targets for balanced and rapid economic development of the country.
The business organization should provide necessary cooperation to the government.
5) Implementing Socio Economic Policies:
The government expects cooperation and help from the business sector in implementing socio-economic programmes and policies.
6) Suggestions to the Government:
The business organisation can provide suggestions to the government before framing impor-tant policies such as Industrial Policy, Import Export Policy, Licensing Policy etc. Such suggestions are helpful for framing organisation-friendly policies.
7) No favours:
The commercial organization should not take any favour from the government officials by
bribing or influencing them.
8)
Contributing to Government Treasury:
The Commercial organization must contribute the funds to government during the emergencies
and natural calamities like floods, earthquakes etc.
4) State any four CSR activities.
Ans:
The Policy recognizes that corporate social responsibility is a commitment to support initiatives that measurably improve the lives of underprivileged by one or more of the following focus areas as notified under Section 135 of the Companies Act 2013 and Companies (Corporate
Social Responsibility Policy) Rules 2014:
i)
Eradicating hunger, poverty & malnutrition, promoting preventive health care & sanitation &
making available safe drinking water.
ii)
Promoting education, including special education & employment enhancing vocation skills
especially among children, women, elderly & the differently abled & livelihood enhancement
projects.
iii) Reducing child mortality and improving maternal health by providing good hospital facilities
and low cost medicines.
iv) Ensuring environmental sustainability, ecological balance, protection of flora & fauna, animal
welfare, agro forestry, conservation of natural resources & maintaining quality of soil, air &
water.
v) Employment enhancing vocational skills.
vi) Measures for the benefit of armed forces veterans, war widows & their dependents.
vii) Training to promote rural sports, nationally recognized sports.
viii) Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socia-economic development & relief & welfare of the Scheduled Castes,
the Scheduled Tribes, other backward classes, minorities & women.
ix) Rural development projects, etc
x)
Slum area development.
Q.5. Justify the following statements.
1) Role of media has major influence on business organisation.
2) Business should allow workers participation in management.
3) Expectations of society towards business are changing.
4) Business organisaitions should avoid environmental pollution and ecological imbalance.
5) All sorts of unfair practices related to stock exchange should be avoided.
6) Business ethics contains moral and social values for doing business.
7) Business ethics can be considered as a tool for social development.
Q.6. Attempt the following.
1) What is social responsiblity of commercial organisation. towards consumers?
2) State different types of responsibilities towards society.
3) Describe the responsibilities of commercial organisation towards investors.
4) Describe the features of business ethics.
5) What is corporate social responsibility ?
Q.7. Answer the following.
1) Explain the responsibilities of business towards employees.
Ans:
Employees are human resource to the organisation. They must be treated with dignity and respect. The management and employees should develop mutual understanding and trust. Government
has passed various labour laws to safeguard the interest of employees.
Business has following responsibility towards employees
1) Job security:
Security of job provides mental peace and employees can work with full dedication and
concentration. Commitment with the work will raise their morale and loyalty towards the
organisation.
2) Fair Remuneration:
The business should pay attractive salaries to all their employees. Other incentives like bonus,
overtime allowance etc. should be given to them. Remuneration should be fixed according to
the nature of work. Suitable wage plans providing increments and revision of wages is also
essential.
3) Health and safety Measures:
Business should protect health and hygiene of employees. Canteen facilities, medical facilities
and proper sanitation must be provided to the workers. Proper maintenance of machines and premises
must be done to prevent accidents and to control pollution. Safety equipment like hand gloves, safety
shoes, helmets, goggle, masks etc. should be provided to concerned employees.
4) Good Working Condition:
The employees should be provided with good working conditions such as adequate lighting,
ventilation, drinking water etc. Necessary steps should be taken to avoid air, water and sound
pollution. There should be proper working hours with lunch breaks and rest pauses etc.
5) Recognition of Trade Unions:
It is the responsibility of business organisation to maintain industrial peace. Employer must
recognize the workers' right to join trade union. Employer should not restrict employees from
forming trade union. 'Divide and Rule' policy should not be followed. Management should sort
out various problems of workers by holding talks or negotiations with such unions. Management and union should agree to ban strikes and lockouts to protect interest of both the parties.
6) Education and Training:
Organisation should make every possible attempt to educate employees. Guidance and methods of training depend on the nature of job. 'Introduction Training', 'Refresher Training' is
conducted to keep employees updated on the latest development. Training makes employees
confident and also it increases their efficiency.
7) Workers Participation in Management:
The workers must be encouraged to take part in management by forming workers committee.
Suggestion schemes, profit sharing can be encouraged by management. It will raise their morale and give them a sense of belonging.
8) Promotion and Career Opportunities.
Business should offer adequate opportunities of promotion to their talented employees. They
should give proper information about qualifications, skills and experience required to obtain
promotion. It will increase awareness among employees and they will also be motivated to
take efforts.
9) Proper Grievance Procedure:
There should be proper grievance procedure to handle employees' complaints. All queries
should be sorted quickly. The employees must feel satisfied. Investigations and necessary
actions should be taken to settle their grievances.
10) Miscellaneous
a.
Fair treatment to all employees.
b.
To recognize, appreciate and encourage special skills of employees.
c.
To introduce code of conduct.
d.
To provide opportunity for meaningful work and to recognize goals.
e.
To protect religious, social, political rights of employees.
f.
Allowing formation of informal groups.
2) Define concept of social responsibility and what is the need for social responsibility.
Ans:
Social responsibility of business refers to its obligation to take those decisions and perform
those actions which are desirable in terms of the objectives and values of our society. So, all the activities of 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.
Definitions:
Howard D. Bowen - 'Social Responsibility is to pursue those policies to make those decisions, or to
follow those lines of action which are desirable in terms of the objectives and values of our society.'
Keith Davis - 'Social responsibility of business refers to the obligations of business man's decisions
and actions beyond the firm's direct economic and technical interest.'
Need for Social responsibility
Business organisation is run by profit motive but profit maximisation should not be the sole aim.
Commitment to society is also important. The following points bring out the need for social responsibility of business
1)
Concept of Trusteeship:
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 trustees of society.
2) Changing expectations of society:
Society's expectations from business firms have undergone a drastic change over the years. In
the early days, business were viewed only as a provider of goods and services.
But today society expects business to be a responsible citizen and contribute towards social
welfare.
3) Reputation:
Businesses spend huge amount of resources in brand building and strengthening their image.
A socially responsible company enjoys a good reputation in the society. It results in increased
sales, profitability, attraction of talent and sustained growth.
4) Protection of Environment:
Business organisation should make proper use of country's natural resources. They should
avoid environmental degradation such as contamination of water resources, depletion of the
ozone layer etc. which have been caused by businesses. These have resulted in poor health of
the community and placed a question mark on the survival of human species.
5) Optimum Utilisation of Resources:
Modern businesses have huge amount of resources at their disposal. With such large resources
businesses are in a better position to protect society's interests. Wastage of resources should be
avoided.
6) Pressure of trade Union:
Nowadays, workers have become conscious of their rights. Trade unions are growing fast and
play important role in business environment. Workers expect management to provide fair
wages, bonus etc. to avoid conflicts between trade unions and management. To avoid conflicts, business should understand responsibility and act accordingly.
7)
Growth of Consumer Movement:
Development of education and mass media and increasing competition in the market have
made the consumers conscious of their rights and powers in determining market forces. So,
business enterprises have to follow consumer oriented policies.
8) Government Control:
From the point of view of a business, government regulations are undesirable because they
limit freedom. Government have enacted various laws. This has put moral as well as legal
pressure on business.
9) Long term self interest:
A firm and its image stands 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 and government officials, feel that business enterprise is not serving
their interest, they will tend to withdraw their cooperation to the enterprise concerned so in
their own self interest, a firm fulfils its social responsibility.
10) Complexities of Social Problems:
Some of the social problems have been created by business firms themselves such as pollution,
unsafe work places, discrimination etc. It is the moral obligation of business to solve such
social problems.
11) Globalisation :
The entire globe is the market place nowadays. lt provides more opportunities and challenges
to business. International trade barriers have reduced and resulted in global distribution of
goods and services. Countries who have adopted good practices are influencing the world.
12) Role of Media:
Media plays important role in public life. Due to internet, it is easier to reach a common man.
Media is very vibrant and active. It can influence masses in society. Media can raise voice against
business malpractices and exploitation of consumers. Business should not ignore social values.
3) Explain the responsibilities of a business unit towards society at a large.
Ans:
4) What are the responsibilities of business towards investors and government.?
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