NCERT Solutions for Class 11th Business Studies Chapter 6 – Social Responsibilities of Business

Multiple Choice Questions

1. Social responsibility is

(a) same as legal responsibility

(b) broader than legal responsibility

(c) narrower than legal responsibility

(d) None of the above

Answer (b) Social responsib Ity is border Ihen legal responsibility 0f business II is a firm’s recognition of SOCial obligated even though not covered by law, along Wllh Ihe obligations laid down by law,

2. If business is to operate in a society which is full of diverse and complicated problems, it may have

(a) little chance of success

(b) great chance of success

(c) little chance of failure

(d) no relation with success or failure

Answer (a) In this situation survival of business is endangered due to enormous social illnesses. A society with fewer problems provides better business environment for a firm.

3. Business people have the skills to solve

(a) all social problems

(b) some social problems

(c) no social problems

(d) all economic problems

Answer (b) Environmental pollution, unsafe workplace, corruption in public institutions, and discriminatory practices In employment are some of the social problems which can be solved with the help of business people.

4. That an enterprise must behave as a good citizen is an example of its responsibility towards

(a) owners

(b) workers

(c) consumers

(d) community

Answer (d) A business enterprise must behave as a good citizen and act according to the well accepted values of the society following government regulations and protect the environment for the benefit of the community.

5. Environmental protection can best be done by the efforts of

(a) business people

(b) government

(c) scientists

(d) all the people

Answer (d) All sections of the society have equal responsibility to protect the environment in their own capacity.

6. Carbon monoxide emitted by automobiles directly contributes to

(a) water pollution

(b) noise pollution

(c) land pollution

(d) air pollution

Answer (d) Air pollution is the result of a combination of factors which lowers the air quality especially the carbon monoxide emitted by automobiles.

7. 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 these

Answer (d) Pollution control result in all of these.

8. Which of the following is capable of doing maximum good to society?

(a) Business success

(b) Laws and regulations

(c) Ethics

(d) Professional management

Answer (c) Ethical behaviour is lust and fair conduct which goes beyond economic or professional success and observing laws or government regulations and hence does maximum good to society

9. Ethics is important for

(a) top management

(b) middle-level managers

(c) non-managerial employees

(d) All of these

Answer (d) Ethics should be followed at all loves for a value based business which is good tor the society.

10. Which of the following alone can ensure effective ethics programme in a business enterprise?

(a) Publication of a code

(b) Involvement of employees

(c) Establishment of compliance mechanisms

(d) None of the above

Answer (b) Involvement of employees In ethics programmes IS essential as it is the employees at different levels who implement ethics policies to make ethical business a reality.

Short Answer Type Questions

Question 1. What do you understand by Social responsibility of business? How is it different from legal responsibility?

Answer Social responsibility of business refers to ItS obligation to perform those actions which are desirable In terms of the objectives and values of our society and benefit the community BUSiness cannot exist With the sole purpose of maximising profits and has to undertake various activities for public good so as to maintain good Will among people.

Social responsibility is broader than legal responSibility of business. Legal responsibility may be fulfilled by mere .compliance with the law but SOCial responsibility includes voluntary obligations towards society not covered by law, along with the obligations laid down by law.

Question 2. What is environment ? What is environmental pollution ?

Answer The environment is defined as the totality of man’s surroundings including both natural and man-made surroundings including natural resources like land, water, air, fauna and flora and raw materials; or man-made resources such as cultural heritage, socioeconomic institutions and the people.

Environmental pollution refers to the injection of harmful substances into the environment which cause change in the physical, chemical and biological characteristics of air land and water and can harm the life of humans and other species.

Question 3. What is business ethics? Mention the basic elements of business ethics.

Answer ‘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

The basic elements of business ethics are

(i) Top management commitment
(ii) Publication of a Code’
(iii) Establishment of compliance mechanism
(iv) Involving employees at all levels
(v) Measuring results

Question 4. Briefly explain (a) Air pollution, (b) Water pollution and (c) Land pollution.


(a) Air Pollution Air pollution is caused by a combination of factors which lowers the air quality. It IS mainly due to carbon monoxide emitted by automobiles smoke and other chemicals from manufacturing plants which are released in the air. Air pollution has created a hole In the ozone layer leading to dangerous warming of the Earth.

(b) Water Pollution Water pollution is caused by dumping of chemical, waste in water bodies like rivers, streams, etc

Water pollution has led to the death of several animals and posed a serious threat to human life

(c) Land Pollution Land pollution s caused by the dumping of toxic wastes on land which damages the quality of land making It unfit for agriculture or plantation,

Question 5. What are the major areas of social responsibility of business?

Answer When the business commenced, SOCial objective of the firm recognised and they are able 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.

(ii) Responsibility towards the Workers Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work and ensure a fair wage of their work

(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.

(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 and protect the natural environment.

Long Answer Type Questions

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

Answer Arguments for Social Responsibility

(i) Justification for Existence and Growth The mission of every business is to provide goods and services to satisfy human wants. Profit should be viewed as an outcome of services to the people. Thus, practice of social responsibility by business provides justifications for its existence and growth.

(ii) Long-term Interest of the Firm Social responsibility enhances the image and goodwill of the firm and results in maximum profits In the long run. If members of the society like workers, consumers, shareholders, and government officials are not convinced that the business enterprise is socially responsible, they will tend to withdraw their cooperation to the enterprise concerned.

(iii) Avoidance of Government Regulation Government regulations limit the freedom of business. 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 Business enterprises should assume social responsibilities as the people who are dissatisfied with the business may resort to anti-social activities which may harm the interest of business itself.

(v) Availability of Resources with Business Business institutions can help society to tackle its problems better as they have valuable financial and human resources which can be effectively used for solving problems.

(vi) Converting Threats into Opportunities Business enterprises can solve the social problems and can reap gains from them by accepting the challenge of converting risky situations into profitable deals.

(vii) Better Environment for Doing Business Business may have little chance of success If it is to operate in a society full of diverse and complicated problems. Therefore. the business system should do something to solve the social problems to create a better environment conducive to its own survival.

(viii) Holding Business Responsible for Social Problems Some of the social problems like environmental pollution, unsafe workplaces, corruption in public Institutions, and discriminatory practices in employment have either been perpetuated by business enterprises themselves. Therefore. it is the moral obligation of business to contribute in solving these problems

Arguments Against Social Responsibility

(i) Violation of Profit Maximisation Objective According to this argument, business exists only for profit maximisation and social responsibility is against this objective. Social responsibility of business is fulfilled it it maximises profits through Increased efficiency and reduced costs.

(ii) Burden on Consumers It is argued that social responsibilities like pollution control and environmental protection involve huge costs which are likely to be shifted on to the consumers in the form of higher prices

(iii) Lack of Social Skills According to this argument social problems should be solved by specialised agencies as businessmen do not have the necessary understanding and training to solve social problems

(iv) Lack of Broad Public Support According to this argument, the public in general does not like business involvement or interference in social programmes because of which business cannot operate successfully in solving social problems.

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

Answer The following forces have been responsible for Increasing concern of business enterprises towards social responsibility.

(i) Threat of Public Regulation Threat of public regulation is one important reason due to which business enterprise feels concerned with social responsibility. Democratically elected governments have to take care of every section of the societies thus regulating the businesses behaving in a socially irresponsible manner.

(ii) Pressure of labour Movement Labour movement for ensuring fair gains for the working class throughout the world has become very powerful as labour has become far more educated and organised. This has forced business enterprises to pay due regard to the welfare of workers.

(iii) Impact of Consumerism Development of education and mass media and increasing competition In the market have made the consumer aware of his rights and power which has forced business enterprises to follow a customer oriented approach.

(iv) Development of Social Standard for Business New social standards consider economic activity of business enterprises as legitimate but with the condition that they must also serve social needs. Business functioning is to be ultimately judged on the basis of social standards

(v) Development of Business Education Educated persons as consumers, investors, employees, or owners have become more sensitive towards social issues with the development of business education with its rich content of social responsibility.

(vi) Relationship Between Social Interest and Business Interest Business enterprises have started realising the fact that social interest and business interest are complementary to each other and that long-term benefit of business lies In serving the society well.

(vii) Development of Professional, Managerial Class Previously business was managed by the owners but now professional management education in universities and specialised management institutes have created a separate class of professional managers who have a positive attitude towards social responsibility along with profit earning.

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

Answer 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 the society Like every individual living in society, business too has certain obligations towards society in terms of respect for social values and norms of behaviour.

It is obligatory on part of the business enterprise not to do anything that is undesirable from society’s point of view. 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 [he 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

(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

(ii) Responsibility towards the Workers Management of an enterprise IS also responsible for providing opportunities to the workers for meaningful work and ensures fair wage for their work.

(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.

(iv) Responsibility towards the Government and Community An enterprise must respect the la…… of the country and pay taxes regularly and honestly It must behave as a good citizen and act accord ng to the wei accepted values of the society and protect the natural environment.

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

Answer Protection of the environment is a serious issue that confronts business managers and decision makers

Business enterprises need to adopt pollution control measures due to following reasons

(i) Reduction of Health Hazards Pollutants in the environment can cause many complications. diseases like Pollution control cancer, heart attacks and lung measures are needed to check the spread of such diseases for ensuring a healthy life on Earth

(ii) Reduced Risk of Liability If an enterprise is held liable for causing damage to people by the toxicity of gaseous, liqUid and solid wastes It has released into the environment. it may be required to pay compensation to affected people This risk Of liability can be reduced by Installing pollution control devices in its premises.

(iii) Cost Savings Improper production technology results In greater wastes which leads to higher cost of waste disposal and cost of cleaning the plants An effective pollution control programme can thus save operating costs of business

(iv) Improved Public Image Society today is conscious of environmental quality and hence a firm’s policies and practices for controlling wastes Influence people’s attitude towards Its working A firm that adopts pollution control measures will be perceived as a socially responsible enterprise

(v) Other Social Benefits Pollution control results In many other benefits I ke clearer VISibility, cleaner buildings better quality of hfe, and the availability of natural products in a purer form.

(vi) Legal Obligations There are certain laws in place to control pollution with which the business enterprises also have to comply so as to control pollution which causes nsks to environmental quality, human health and damage to natural and man-made resources.

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

Answer Some of the specific” steps which can be taken by business enterprises to protect the environment from the dangers of pollution are as follows

(i) Top Management Commitment The first and the foremost step is to have a definite commitment by top management of the enterprise to create, mamtam and develop work culture for environmental protection

(ii) Involving Employees at All Levels Second step IS to ensure that comm tment to environmental protection IS shared throughout the enterprise by all diVISIOns and employees as they Will actually implement the environment protect on Programmes and policies.

(iii) Laying Down Policies for EnVironment Protection Another Important step is to develop clear-cut potatoes and programmes 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

(iv) Legal Compliance A very Important and essential step IS to comply Witt’ the laws and regulations enacted by the Government for prevention of pollution.

(v) Voluntary Participation Participation in government programmes relating to management of hazardous substances. clearing up of polluted rivers plantation of trees and checking deforestation is also an important step in environmental protection by business enterprises

(vi) Measuring Results Periodical assessment of pollution control programmes In terms of costs and benefits is also essential In order to have a steady progress With respect to environmental protection

(vii) Education and Training Another step that can be taken for environmental protection is 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.

Question 6. Explain the various elements of business ethics.

Answer The various elements of business ethics are as under

(i) Top Management Commitment The Chief Executive Officer (or CEO) and other higher level managers need to be openly and strongly committed to ethical conduct as top management has a crucial role in guiding the entire organisation towards ethical behaviour.

(ii) Publication of a ‘Code’ The principles of conduct for the organisation in the form of written documents are referred to as the “code”. It generally covers areas such as fundamental honesty and adherence to laws: product safety and quality; health and safety in the workplace; conflicts of interest; fairness in selling/marketing practices; and financial reporting.

(iii) Establishment of Compliance Mechanisms Suitable compliance mechanisms should be established to ensure that actual decisions and actions comply with the firm’s ethical standards. Some examples of such mechanisms are: considering values and ethics in recruiting and hiring; emphasising corporate ethics in training; auditing performance regularly to analyse the degree of compliance; and instituting communication systems to help employees report incidents of unethical behaviour.

(iv) Involving Employees at All Levels Involvement of employees at all levels in ethics programmes is essential as it is the employees who implement ethics policies to make ethical business a reality. Thus, smail groups of employees can be formed to discuss the important ethics policies of firms and examine attitudes of employees towards these policies.

(v) Measuring Results The firms must audit to monitor compliance with ethical standards to measure the end results of ethics programmes as far as possible and further course of action should then be decided by the top management team in discussion with other employees.

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