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Class 11 NCERT Solutions: Chapter 6 Social Responsibilities of Business and Business Ethics Exercise 6.2 (Business Studies)

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 Long Answer Questions

Question 1: Build up arguments for and against social responsibilities.

Answer: The obligation of business to act in a manner which will serve in the best interest of society is termed Social Responsibility. The obligation of business to take decisions and perform actions, which are desirable in terms of the objectives and values of our society is Social Responsibility.

Arguments for Social Responsibility

The arguments for Social Responsibility are as follows:

1. Justification for Existence and Growth: Business uses the resources of society and is a creation of society, so it is expected to satisfy human needs by providing goods and services. Profit earning should be looked at as an outcome of service to the people. If the image of the business is good, it enjoys the support of society, and it can prosper and grow only when it fulfils its social responsibility. 

2. Long-term Interest of Firms: A firm can be profitable and prosperous only when it thinks of being profitable in the long run. A firm and its image stand to gain maximum profits in the long run when it has its highest goal as Service to Society. A business has to fulfil social responsibility towards various groups of society, like workers, consumers, shareholders, government officials, etc.

3. Avoidance of Government Regulations: If a business does not want intervention from the government, then it must fulfil social responsibility. The government can restrict the freedom and flexibility of a business, and enact and force them to assume social responsibility, so businesses should voluntarily fulfil their obligations to society.

4. Maintenance of Society: If the people related to the business feel that they are not getting their dues from the business, then they may resort to anti-social activities.  This can distort the image of the business and can be very harmful, so businesses must fulfil their social responsibility.

5. Availability of Resources with Businesses: The problems of society can be effectively solved with the help of valuable financial and human resources of the businesses. For example, managerial talent and capital resources, and years of experience in organising business activities can help society to tackle its problems better, given the huge financial and human resources at its disposal.

6. Converting Problems into Opportunities: Businesses can convert problems into opportunities by taking risks. It takes risk as the reward of profit bearing. It not only solves social problems but also provides opportunities for growth. For example, the problem of regional disparity can be solved by setting up industries in backward regions, and it can benefit the business as it gets various tax benefits.

Arguments against Social Responsibility

The arguments against Social Responsibility are as follows:

1. Violation of Profit Maximisation Objective: It is considered that social responsibility is against the objective of profit maximisation. But business is an economic activity and its main goal is to earn and maximise profit.

2. Burden on Consumers: Huge financial investment, which has no proper return, is required to fulfil social responsibilities, like in the case of pollution control and environmental protection. The burden of such costs is usually passed on to consumers in the form of higher prices. It is unfair to pass the burden on consumers in the name of social responsibility.

3. Lack of Social Skills: There is a difference between the way in which how business problems and social problems are solved. A person might be good at managing a business but may not have the required skills to solve complex social problems. Therefore, social problems should be solved by specialised agencies.

4. Lack of Broad Public Support: Businesses do not get the support of people as the public does not like the involvement or interference of businesses in social programmes.

Question 2: Discuss the forces which are responsible for increasing concern of business enterprises towards social responsibility.

Answer: The obligation of business to act in a manner that will serve in the best interest of society is termed as Social Responsibility. The obligation of business to take decisions and perform actions, which are desirable in terms of the objectives and values of our society is Social Responsibility.

The forces which are responsible for increasing concern of business towards social responsibility are:

1. Threat of Public Regulation: There is always a threat of public regulation on businesses. Businesses have to act in a responsible manner otherwise strict actions are taken to regulate them for safeguarding people’s interests. Due to the threat of public regulation businesses now feel concerned with social responsibility.

2. Pressure of Labour Movement: Business enterprises are forced to pay due regard to the welfare of workers instead of following a policy of ‘hire and fire’ because labour is now more educated and organised. Because of such labour movements, businesses practice social responsibilities.

3. Impact of Consumer Consciousness: Consumers are more conscious of their rights and power in determining market forces because of the development of education and mass media and increasing competition in the market. The principle of Caveat Emptor or let the buyer beware has been replaced by the principle of ‘Customer is King’. Customer-oriented policies are now being followed by businesses.

4. Development of Social Standard for Business: A business cannot exist in isolation. Society permits a business to grow and prosper. Business is now not considered as a mere money-making entity. It has to follow social norms and standards as developed by society. 

5. Development of Business Education: More and more people are aware of the social purpose of business because of the development of business education with its rich content of social responsibility. Consumers, investors, employees, and owners have become more aware and sensitive towards social issues than before.

6. Relationship between Social Interest and Business Interest: Social interest and business interest are not contradictory, but complementary to each other. Businesses have realised that they cannot grow in the long run by exploiting society. Instead, they can prosper by serving society. 

Question 3: ‘Business is essentially a social institution and not merely a profit-making activity’. Explain.

Answer: Profit maximisation is the main goal of a business. However, business organisations are not solely for profit, as they are established by society to satisfy its demands for goods. Every business makes use of societal and human resources. As a result, issues in society such as poverty and unemployment have an effect on businesses. Activities such as generating employment and healthy working conditions, paying taxes, preventing pollution, and responding to customer concerns are instances of socially acceptable practices that improve society’s image. 

Here are some of the social responsibilities of a business towards society.

  • To maintain a balance between the economy and the ecosystem.
  • To generate employment opportunities. 
  • To protect the environment by conserving natural resources and wildlife.
  • To promote sports and culture.
  • To help the weaker sections of society. 
  • To preserve the social and cultural values of the society and promote these values. 
  • To provide proper assistance in education, development, etc., of society. 

Besides society, a business enterprise has various responsibilities towards other interest groups like owners, investors, customers, suppliers, employees, and the government.

Question 4: Why do enterprises need to adopt pollution control measures?

Answer: Pollution prevention or control is needed to safeguard valuable environmental resources and improve environmental quality so that the preserved resources can be used for the benefit of humanity and the betterment of people’s health and well-being. The amount of damage done to a specific medium (air, water, or land) changes depending on the type of pollutant, the amount of pollutant disposed of, and the distance from the source of pollution. Environmental destruction cannot be ignored by business enterprises. They need to adopt appropriate pollution control measures not only to avoid criticism but also to reap the advantages of such measures.

Need for Pollution Control

1. Reduction of Health hazards: Pollutants in the environment are being blamed for a growing number of diseases, including cancer, heart attacks, and lung complications. Pollution control measures can not only reduce the severity of such diseases, but they can also promote a healthy way of life on Earth.

2. Reduced risk of liability: It is possible that an enterprise will be held liable for compensating people who have been harmed by the toxicity of gaseous, liquid, and solid wastes released into the environment. As a result, it is a good business practice to install pollution control devices in its facilities to reduce the risk of liability.

3. Cost reduction: An effective pollution control programme is also required to reduce operating costs. Cost savings are especially noticeable when improper production technology produces more waste, resulting in higher waste disposal and cleaning costs.

4. Improved public image: As society becomes more conscious of environmental quality, a company’s waste-control policies and practices will have a greater influence on people’s attitudes toward its operations. A company that promotes environmental causes will have a good reputation and will be perceived as a socially responsible enterprise.

5. Social benefits: Pollution control has many other advantages, such as improved visibility, cleaner buildings, a higher quality of life, and the availability of natural products in a purer form.

Question 5: What steps can an enterprise take to protect the environment from the dangers of pollution?

Answer: We have a social responsibility to protect the environment’s quality since it is vital to all of us. Every member of society, whether the government, corporate companies, customers, employees, or other members of society, can do something to reduce pollution to the environment.

Every business has a social duty to take action not just to reduce pollution but also to safeguard environmental resources. Businesses are the main sources of money, employment, commerce, and technology. They also control huge financial, physical, and human resources. In most situations, a change or modification in the manufacturing process, redesign of equipment, substitution of low-quality materials with superior ones, or other innovative ways might greatly reduce or even eliminate pollution completely.

Some of the particular steps that an enterprise can take to protect the environment are:

1. A strong commitment by the enterprise’s top management to develop, maintain, and create a work culture based on environmental protection and pollution prevention.

2. Ensuring that all divisions and workers share the enterprise’s commitment to environmental protection.

3. Developing strict patterns and programmes for procuring high-quality raw materials, utilising superior technology, implementing scientific waste disposal and treatment processes, and improving staff skills for pollution management.

4. Adherence to the rules and regulations set by the government for pollution control.

5. Participation in government programmes, including hazardous material management, river cleanup, tree planting, and deforestation control.

6. Organizing educational seminars and training materials to share technical knowledge and expertise with suppliers, dealers, and customers in order to get them to participate in pollution control programmes.

Question 6: Explain the various elements of business ethics.

Answer: Business ethics refers to the set of principles or standards that govern the moral conduct of business. It is concerned with the relationship between the techniques, practices, and objectives of an organization. Business ethics says that businesses have to be honest with themselves and society. Some examples of business ethics are treating workers fairly, charging fair prices from customers, providing good quality goods and services, earning reasonable profits, etc. However, unethical behaviour involves corrupting public servants to get favours, defrauding customers through misleading advertisements, etc. 

A businessperson is said to be ethical if he/she acts upright and serves society’s interests. An ethical business is a good business as it works for the interests of society. Ethical businesses have a good image in the eyes of the public, as people have confidence in the business, which leads towards greater success. Ethical activity is not only good for society, but also for businesspeople and businesses as it helps them enhance the quality of their lives and the work they do. 

Elements of Business Ethics

1. Top Management Commitment: The top management of an organization plays a crucial role in ensuring business ethics. They guide the whole organization towards ethical behaviour. To get better results and inculcate ethical behaviour amongst the members of an organization, the CEO and other top-level managers need to strongly commit themselves to ethical conduct. Their commitment to the ethical code of conduct will set a good example for the employees and encourage them to follow the codes themselves. They must lead the employees to continue to develop the firm and uphold its values.  

2. Publication of a ‘Code’: Companies having effective ethics programmes define the principles of conduct in written form for the whole organization. This written document of principles of conduct is known as “code.” The code or code of conduct covers various areas, like product quality, product safety, fundamental honesty, adherence to laws, financial reporting, marketing practices, employment practices, health and safety at the workplace, etc. These principles or standards guide an organization and its actions. 

3. Establishment of Compliance Mechanisms: Publishing the code of conduct is not sufficient until the organization establishes a mechanism to ensure they are being followed by the employees and the actions of the firm comply with these standards. For example, ensuring the applicant has values and ethics while recruiting, forming a communication system for employees to report any incident of unethical behaviour, etc. 

4. Involving employees at all levels: Employees of an organization play a crucial role in the implementation of ethical policies at different levels of the business, making the idea of ethical business real. Therefore, organizations need to involve employees in ethics programmes. For example, an organization can form a small group of employees to discuss the essential ethics policies of the firm and evaluate the employees’ attitudes towards these policies. 

5. Measuring results: It is not easy to measure the results of an ethics programme with full accuracy. Therefore, the organizations implementing ethics programmes can verify and audit the end results and ensure that the employees carry out the work according to ethical standards.  Once the auditing has been completed, the top-level management and other employees of the firm can discuss the end results for their further course of action. 

Question 7: Discuss the guidelines enumerated by the Companies Act 2013 for Corporate Social Responsibility.

Answer: Corporate Social Responsibility is a business model used by companies to enhance society and the environment through concerted efforts. It is a great way for business organizations’ to build morale in the workplace and build a good image in the market. There is no singular widely accepted meaning of CSR; rather, each definition that presently exists underpins the impact that businesses have on society as a whole and the societal expectations that they have. 

1. The European Commission describes CSR as “the accountability of enterprises for their social impact”.

2. The World Business Council for Sustainable Development describes CSR as “the ongoing dedication by business to contribute to economic development while enhancing the standard of life of the workers and their family members, along with that of the community and society at large”.

The guidelines enumerated by the Companies Act 2013 for Corporate Social Responsibility are as follows:

In India, the notion of CSR is regulated by Clause 135 of the Companies Act, 2013, which was approved by both Houses of Parliament and got the President’s approval on August 23, 2013. The Act’s CSR provisions apply to businesses with a yearly turnover of ₹1,000 crores or more, or a net worth of ₹500 crores or more, or a net profit of ₹5 crores or more.

1. The new regulations, which take effect in the fiscal year 2014-15, also require companies to form a CSR group consisting of their board members, including at least one independent director.

2. The Act encourages companies to spend 2% of their average net profit over the previous three years on CSR activities.

3. Schedule VII of the Act specifies the indicative activities that can be undertaken by a company under CSR.

4. Only CSR activities carried out in India will be considered.

5. CSR does not apply to activities that are solely for workers and their families.



Last Updated : 30 Mar, 2023
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