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NCERT Solutions for Class 11th: Ch 6 Social Responsibilities of Business

and Business Ethics Business Studies

Page No: 156

Exercises

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 them
► (b) Broader than legal responsibility

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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
► (a) Little chance of success

3. Business people have the skills to solve

(a) All social problems
(b) Some social problems
(c) No social problems

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(d) All economic problems

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► (c) No social problems

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

responsibilities towards
(a) Owners
(b) Workers
(c) Consumers
(d) Community
► (d) Community

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

(a) Business people
(b) Government
(c) Scientists
(d) All the people
► (d) All the people

6. Carbon monoxide emitted by automobiles directly contributes to

(a) Water pollution
(b) Noise pollution
(c) Land pollution
(d) Air Pollution
► (d) Air Pollution

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 them
► (d) All of them

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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
► (c) Ethics

9. Ethics is important for

(a) Top management
(b) Middle-level managers
(c) Non-managerial employees
(d) All of them
► (d) All of them

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 a compliance mechanism
(d) None of them
► (a) Publication of a code

Short Answer Questions

1. What do you understand by social responsibility of business? How is it

different from legal responsibility?

Answer

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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.
Social responsibility is broader than legal responsibility of business. Legal
responsibility may be fulfilled by mere compliance with the law whereas
Social responsibility is a firm’s recognition of social obligations even
though not covered by law, along with the obligations laid down by law.
In other words, social responsibility involves an element of voluntary
action on the part of business people for the benefit of society.

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2. What is environment? What is environmental pollution?

Answer

The environment is defined as the totality of man’s surroundings - both

natural and man-made.

Environmental Pollution is injection of harmful substances into the

environment. It is result of industrialisation. Pollution changes the
physical, chemical and biological characteristics of air, land and water.
Pollution harms human life and the life of other species. It also degrades
living conditions while wasting or depleting raw material resources.

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

ethics?

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Answer

Business ethics refer to the values and principles that govern the
behaviour of individuals in an organisation such that the business
activities are desirable from the viewpoint of society.

Elements of business ethics are:

• Top management commitment

• Publication of a ‘Code’
• Establishment of compliance mechanism
• Involvement of employees at all levels
• Measurement of results

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

Answer

(a) Air pollution: Air pollution is the result of a combination of factors

which lowers the air quality. It is mainly due to carbon monoxide
emitted by automobiles which contributes to air pollution.

(b) Water pollution: Water becomes polluted primarily from chemical

and waste dumping. It has led to the death of several animals and posed
a serious threat to human life.

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(c) Land pollution: Dumping of toxic wastes on land causes land

pollution. This damages the quality of land making it unfit for agriculture
or plantation.

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

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Answer

The major areas of social responsibility of business are:

→ Economic responsibility: A business enterprise is basically an

economic entity and, therefore, its primary social responsibility is
economic i.e., produce goods and services that society wants and sell
them at a profit. There is little discretion in performing this
responsibility.

→ Legal responsibility: 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.

→ Ethical responsibility: This includes the behaviour of the firm that is

expected by society but not codified in law. For example, respecting the
religious sentiments and dignity of people while advertising for a
product.

→ Discretionary responsibility: This responsibility is completely voluntary

in nature. It means that a business enterprise may choose to open a
charitable school or hospital for the poor, grant aid to people affected
by natural calamities, provide employment opportunities to the
physically challenged and so on.

Long Answer Questions

1. Build up argument for and against social responsibilities.

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Answer

The argument for social responsibilities are:

→ 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 business activity, it should be
looked upon as an outcome of service to the people. In fact, the
prosperity and
growth of business is possible only through continuous service to
society.. Therefore, assumption of social responsibility by business
provides justifications for its existence and growth.

→ Long-term interest of the firm: A firm and its image stands to gain
maximum profits in the long run when it has its highest goal as ‘service
to society’. 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.

→ Avoidance of government regulation: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.

→ 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.

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→ 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.

→ Converting problems 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.

→ 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.

→ 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.

The arguments against social responsibilities are:

→ Violation of profit maximisation objective: Business exists only for

profit maximisation. Therefore, any talk of social responsibility is against
this objective.

→ Burden on consumers: It is argued that social responsibilities like

pollution control and environmental protection are very costly and often

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require huge financial investments which are likely to be shifted on to

the consumers in the form of higher prices.

→ Lack of social skills: According to this argument, social problems

should be solved by specialized agencies as businessmen do not have
the necessary understanding and training to solve social problems.

→ Lack of Broad Public Support: 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.

2. Discuss the forces which are responsible for increasing concern of

business enterprises towards social responsibility.

Answer

The forces which are responsible for increasing concern of business

enterprises towards social responsibility are:

→ Threat of public regulation: Democratically elected governments is

meant to safeguard the interests of society. Thus, in case the
government feels that a business enterprise is behaving in a manner
that is not socially desirable, then it can regulate the operations of that
enterprise accordingly.

→ 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 organized. This
has forced business enterprises to pay due regard to the welfare of
workers.

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→ Impact of consumer consciousness: Development of education and

mass media and increasing competition in the market have made the
consumer conscious of his right and power in determining market
forces. Thus, business enterprises are made to work more efficiently and
produce better products at reasonable rates to satisfy their customers.

→ Development of social standards: Business enterprises are not mere

profit-making entities. For their long-term growth and existence, they
require to fulfil the new standards of social welfare.
→ Development of business education: Educated persons as consumers,
investors, employees, or owners have become more sensitive towards
social issues than was the case earlier, when such education was not
available.

→ Relationship between social interest and business interest: No

business enterprise can work in isolation from society. Thus, there
should be a balance between business interests and social interests,
such that the business can grow by doing the maximum good to society.

→ Development of professional, managerial class: Previously business

was managed by the owners but now professional management
education in universities and specialized management institutes have
created a separate class of professional managers who have a positive
attitude towards social responsibility along with profit earning.

3. 'Business is essentially a social institution and not merely a profit

making activity'. Explain.

Answer

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The primary objective of any business enterprise is profit maximisation.

This is because profit acts as a measure of success and at the same time
is the main source of income for an enterprise. Also, profits are often
used to finance the expansion projects of a business enterprise.
However, it is argued that business enterprises are not mere profit-
making entities. They are considered as social institutions, too, as they
are created by society. As every business makes use of society's
resources in terms of human and physical capital, it cannot work in
isolation from society. A business needs consumers to buy its products
or services. It needs some suppliers to source raw materials and
equipments. It needs to maintain a good relationship with its suppliers
and consumers so that it can smoothly conduct business. Thus, a need
arises to create a balance between the business interests and social
interests of a business enterprise, such that it can grow by doing the
maximum good to society. Hence, we say that a business enterprise is a
social institution and not merely a profit-making entity.

4. Why do the business enterprises need to adopt pollution control

measures?

Answer

Business enterprises need to take suitable measures for pollution

control not merely to avoid criticisms against them but also to enjoy
other benefits which are:

→ Reduction of health hazards: Pollutants in environment causes many

diseases like cancer, heart attacks and lung complications. Pollution
control measures can not only check the seriousness of such diseases

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but can also be supportive of a healthy life on earth.

→ 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 wastes it has released into the environment. Pollution control
helps in reducing the risk of such liabilities.

→ Cost savings: An effective pollution control programme is also needed

to save costs of operating business.

→ Improved public image: As society becomes increasingly conscious of

environmental quality, a firm’s policies and practices for controlling
wastes will increasingly influence people’s attitude towards its working.

→ 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 purer form.

5. What steps can an enterprise take to protect the environment from

the dangers of pollution?

Answer

The steps which can be taken by business enterprises for environmental

protection are:

→ A definite commitment by top management of the enterprise to

create, maintain and develop
work culture for environmental protection and pollution prevention.

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→ Ensuring that commitment to environmental protection is shared

throughout the enterprise by all divisions and employees.

→ Developing clear-cut policies 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.

→ Complying with the laws and regulations enacted by the Government

for prevention of pollution.

→ Participation in government programmes relating to 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.

6. Explain the various elements of business ethics?

Answer

Elements of business ethics are:

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→ Top management commitment: Top-level officers, such as CEO's and

senior managers, must strongly follow the ethical codes and guide the
other employees in adopting such behaviour.

→ Publication of a ‘Code’: Enterprises must clearly define the ethical

code of conduct, which would include quality standards, laws governing
production and health and safety standards for the employees.

→ Establishment of compliance mechanism: In addition to standards, an

enterprise must also devise a mechanism through which compliance
with the code of conduct can be measured.

→ Involvement of employees at all levels: The successful

implementation of ethical standards requires the involvement of all the
employees at all levels.

→ Measurement of results: Although it is difficult to accurately measure

the end results of ethics programmes, the firms can certainly audit to
monitor compliance with ethical standards.

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