Class XI Business Studies PDF

Class XI Business Studies Chapter 6 Social Responsibilities of Business and Business Ethics Revision Notes Social Responsibility Social...

Class XI Business Studies Chapter 6 Social Responsibilities of Business and Business Ethics Revision Notes Social Responsibility Social responsibility is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems Social responsibility is broader than legal responsibility of business. Legal responsibility may be fulfilled by mere compliance with the law. Social responsibility is more than that. It 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 Need for Social Responsibility Improving Company's Helping company stand Engaging Customer Retaining Top Talent Brand out of competition A socially responsible A social responsibility Many employees want When companies are company can create a policy can impact the to feel like they're part involved in the company's image and buying decisions of something bigger. community, they stand build its brand. of customers. Social responsibility out from By projecting a Some customers are empowers employees the competition. positive image, a willing to pay more for to Building relationships company can make a a product if they know leverage the corporate with customers and name for itself for not a portion of resources at their their neighborhoods only being financially the profit is going to disposal to do good helps improve the profitable, but socially worthy cause brand's image. conscious as well. Arguments for Social Responsibility www.vedantu.com 1 Protect the To get the support of employees, it has become necessary for organisations to discharge interests of responsibility towards their employees. stakeholders Consumer does not buy what is offered to him. He buys what he wants. Consumer sovereignty has, thus, forced firms to assume social responsiveness towards them Fulfilling social obligations is beneficial for long-run survival of the firms Long-run survival A firm and its image stands to gain maximum profits in the long run when it has its highest goal as ‘service to society' It is in its own interest if a firm fulfills its social responsibility. The public image of any firm would also be improved when it support social goals Self-enlightenment With increase in the level of education and understanding of businesses that they are the creations of society, they are motivated to work for the cause of social good. Managers create public expectations by voluntarily setting and following standards of moral and social responsibility. Rather than legislative interference being the cause of social responsibility, firms assume social responsibility on their own. Avoids government Government regulations are undesirable because they limit freedom. regulation 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 For example, Central Pollution Control Board takes care of issues related to environmental pollution Resources Business organisations have enormous resources which can be partly used for solving social problems. Businesses are the creation of society and must work in the best interest of society, both economically and socially. It can help society to tackle its problems better, given the huge financial and human resources at its disposal Professionalisation Management is moving towards professionalism which is contributing to social orientation and Better of business environment The ethics of profession bind managers to social values and growing concern for society A society with fewer problems provides better environment for a firm to conduct its business Holding business Social problems have either been created or perpetuated by business enterprises responsible for themselves social problems 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 Converting Business with its history of converting risky situations into profitable deals, can not only problems into solve social problems but it can also make them effectively useful by accepting the opportunities challenge. Arguments against Social Responsibility www.vedantu.com 2 Violation of profit Business exists only for profit maximisation. Therefore, any talk of social responsibility is maximisation against this objective objective Business can best fulfill its social responsibility if it maximises profits through increased efficiency and reduced costs. Burden on consumers Social responsibilities like pollution control and environmental protection are very costly and often require huge financial investments Businessmen simply shift this burden of social responsibility by charging higher prices from the consumers instead of bearing it themselves Lack of social skills Businessmen do not have the necessary understanding and training to solve social problems Social problems should be solved by other specialised agencies Lack of broad public Public in general does not like business involvement or interference in social programmes. support Therefore, business cannot operate successfully because of lack of public confidence and cooperation in solving social problems Reality of Social Responsibility www.vedantu.com 3 Threat of public where business institutions operate in a socially irresponsible manner, action is regulation taken to regulate them for safeguarding people’s interest. This threat of public regulation is one important reason due to which business enterprise feels concerned with social responsibility. Pressure of labour labour movement for extracting gains for the working class throughout the world movement has become very powerful. This has forced business enterprises to pay due regard to the welfare of workers instead of following a policy of ‘hire and fire Impact of Development of education and mass media and increasing competition in the consumer market have made the consumer conscious of his right and power in consciousness determining market forces Now, customer is the king and business have started following customer oriented approach Development of New social standards consider economic activity of business enterprises as social standard for legitimate but with the condition that they must also serve social needs. business No business can be done in isolation from society Development of Development of business education with its rich content of social responsibility business education has made more and more people aware of the social purpose of business Relationship Business enterprises have started realising the fact that social interest and between social business interest are not contradictory. Instead, these are complementary to interest and each other. business interest long-term benefit of business lies in serving the society well Development of Professional management education in universities and specialised management professional, institutes have created a separate class of professional managers managerial class Professional managers are more interested in satisfying a multiplicity of interest groups in society for running their enterprises successfully than merely following profit goals www.vedantu.com 4  Kinds of Social Responsibility Discretionary Economic responsibility Legal responsibility Ethical responsibility responsibility Business Enterprise's Every business has a Behaviour that is It is the responsibility primary social responsibility to expected by society of the company responsibility is operate within the but not codified in law management to economic i.e., produce laws of the land There is an element of safeguard the capital goods and services a law abiding voluntary action in investment by avoiding that society wants and enterprise is a socially performing this speculative activity sell them at a profit. responsible enterprise responsibility. and undertaking only aswell healthy business ventures which give good returns on investment For example: providing charitable contribution etc. Social Responsibility towards different Interest Group Responsibility towards Responsibility towards Responsibility towards Responsibility towards the shareholders or the government and the workers the consumers owners community organisation must also the right kind of Supply of right quality An enterprise must provide the working conditions to and quantity of goods respect the laws of the shareholders with be given so that it can and services to country and pay taxes regular, accurate and win the cooperation of consumers at regularly and honestly. full information about workers. reasonable prices It must behave as a its working as well as The enterprise must constitutes the good citizen and act schemes of future respect the democratic responsibility of an according to the well growth. rights of the workers enterprise toward its accepted values of the business enterprise to form unions. customers. society. has the responsibility The worker must also The enterprise must to provide a fair return be ensured of a fair take proper precaution to the shareholders or wage and a fair deal against adulteration, owners from the management poor quality, lack of desired service and courtesy to customers, misleading and dishonest advertising, and so on. Business and Environmental Protection www.vedantu.com 5  The environment is defined as the totality of man’s surroundings — both natural and man- made. These surroundings are also in the nature of resources, that are useful for human life. The resources may also be called natural resources like land, water, air, fauna and flora and raw materials; or manmade resources such as cultural heritage, socio-economic institutions and the people Pollution— the injection of harmful substances into the environment is, in fact, largely the result of industrial production Pollution changes the physical, chemical and biological characteristics of air, land and water Pollution exists because the environment can absorb only a limited amount of pollutants and wastes. Some hazardous wastes or toxic by-products and chemicals are termed as hazardous pollutants because they have toxic characteristics that the environment can not assimilate. Pollution thus causes risks to environmental quality, human health and damage to natural and man-made resources. Protection of the environment is directly related to the control of pollution. Causes of Pollution Air pollution Water pollution Land pollution Noise pollution It is mainly due to Water becomes Dumping of toxic Noise caused by the carbon monoxide polluted primarily wastes on land causes running of factories emitted by from chemical and land pollution. and vehicles is not automobiles which waste dumping This damages the merely a source of contributes to air Water pollution has quality of land making annoyance but is also pollution. led to the death of it unfit for agriculture a serious health Similarly, smoke and several animals and or plantation hazard. other chemicals from posed a serious threat Noise pollution can be manufacturing plants to human life responsible for many pollute the air. diseases like loss of Resultant air pollution hearing, has created a hole in malfunctioning of the the ozone layer heart and mental leading to dangerous disorder. warming of the earth Need for Pollution Control 1. Reduction of health hazards: There is increasing evidence that many diseases like cancer, heart attacks and lung complications are caused by pollutants in the environment. 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 wastes it has released into the environment. Business must install pollution control devices in its premises to reduce the risk of liability. 3. Cost savings: www.vedantu.com 6  Cost savings are particularly noticeable when improper production technology results in greater wastes which leads to higher cost of waste disposal and cost of cleaning the plants. 4. Improved public image: A firm that promotes the cause for environment will be able to enjoy a good reputation and will be perceived as a socially responsible enterprise 5. 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 Role of Business in Environment Protection I. A definite commitment by top management of the enterprise to create, maintain and develop work culture for environmental protection and pollution prevention. II. Ensuring that commitment to environmental protection is shared throughout the enterprise by all divisions and employees. III. 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. IV. Complying with the laws and regulations enacted by the Government for prevention of pollution. V. Participation in government programmes relating to management of hazardous substances, clearing up of polluted rivers, plantation of trees, and checking deforestation. VI. Periodical assessment of pollution control programmes in terms of costs and benefits so as to increase the progress with respect to environmental protection. VII. 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. Business Ethics Ethics is concerned with what is right and what is wrong in human behaviour judged on the basis of a standard form of conduct/behavior of individuals, as approved by society in a particular field of activity Business ethics concerns itself with the relationship between business objectives, practices, and techniques and the good of society. Business ethics refer to the socially determined moral principles which should govern business activities Ethical business is good business. Ethical business behaviour improves public image, earns people’s confidence and trust, and leads to greater success Elements of Business Ethics www.vedantu.com 7 Top Publication of a Establishment Involving Measuring management ‘Code' of compliance employees at all results commitment Define the mechanisms levels It is difficult to Top management principles of In order to ensure It is the employees accurately measure has a crucial role in conduct for the that actual at different levels the end results of guiding the entire whole organisation decisions and who implement ethics programmes, organisation in the form of actions comply with ethics policies to the firms can towards ethically written documents the firm’s ethical make ethical certainly audit to upright behaviour which is referred to standards, suitable business a reality. monitor compliance as the “code”. mechanisms should with ethical They must give Therefore, their This generally be established standards. continuous involvement in leadership for covers areas such ethics programmes The top developing and as fundamental becomes a must management team upholding the honesty and and other values of the adherence to laws; employees should organisation product safety and then discuss the quality; health and results for further safety in the course of action workplace; conflicts of interest; employment practices etc www.vedantu.com 8