Important Questions for CBSE Class 11 Business Studies Chapter 6 - Social Responsibilities of Business and Ethics

Very Short Answer Questions (1 or 2 marks)

1. Define social responsibility of a business?

Ans: Social responsibility is an ethical paradigm that implies that an entity, whether it is an organization or an individual, has a responsibility to behave in the best interests of the society as a whole. Every individual has a responsibility to fulfill in order to maintain a balance between the economy and the ecosystem. 

2. Write two examples of business ethics?

Ans: Two examples of business ethics are law-abiding and trustworthiness.

3. State two effects of noise pollution?

Ans: Two effects of noise pollution are: 

• Loss of hearing 

• Malfunctioning of the heart due to sudden, loud noise.

4. What is environmental pollution?

Ans: The whole of man's surroundings, both natural and man-made, is characterized as the environment. These surroundings also include resources that are beneficial to human life. Natural resources, such as land, water, air, fauna and flora, and raw materials, as well as artificial resources, such as cultural heritage, socioeconomic institutions, and people, are examples of resources. Pollution, or the release of dangerous compounds into the environment, is termed as environmental pollution. It can take the form of air, water, noise and land pollution.

5. "Companies have social responsibility towards shareholders or owners' how?

Ans: The organization must offer shareholders regular, accurate, and complete information on its operations as well as it’s future growth plans. A fair and reasonable return should also be provided to the owners of the company.

6. What do you mean by Discretionary responsibility?

Ans: Discretionary responsibility basically means the voluntary responsibility fulfilled by the business.

7. Explain how the labour movement has helped companies to fulfill their social responsibility? 

Ans: Labour movement for extracting gains for the working class throughout the world has become very powerful. This has compelled businesses to consider the welfare of their employees rather than adopting a "hire and fire" strategy.

8. 'Social responsibility is a burden on consumers' Describe the statement?

Ans: Social responsibilities like pollution control and environmental protection are very costly and often require huge financial investments. Instead of carrying the burden of social duty, businesspeople simply pass it to their customers by demanding higher costs.

9. 'To avoid government regulation, businessmen follow the concept of social responsibility’. How much do you agree with this statement?

Ans: I agree with this statement. 

The government regulations and legal restrictions limit the freedom and autonomy of the business enterprises, the businessmen are thought to be able to escape the problem of government restrictions by voluntarily taking on social duties, hence reducing the need for new legislation. 

For example, the Central Pollution Control Board takes care of issues related to environmental pollution, and if a business firm follows appropriate measures to avoid environmental pollution, then the interference of the said board could be reduced.

10. Why is social responsibility emphasized? State one need for social responsibility?

Ans: Every individual has a responsibility to fulfill in order to maintain a balance between the economy and the ecosystems. A company's image and brand can be built through being socially responsible. A corporation can establish a reputation for being not just financially successful, but also socially responsible by creating a positive image by fulfilling its responsibility towards the society.

Short Answer Questions (3 or 4 Marks)

11. Why is business responsible for Environment Protection?

Ans: The whole of man's surroundings - both natural and man-made - is characterized as the environment. These surroundings also include resources that are beneficial to human life. Natural resources, such as land, water, air, fauna and flora, and raw materials, as well as artificial resources, such as cultural heritage, socioeconomic institutions, and people, are examples of resources.

Pollution is the release of dangerous compounds into the environment, which is mostly caused by industrial activity. Pollution changes the physical, chemical, and biological characteristics of air, land, and water, as the environment can only absorb a certain quantity of pollutants. Hazardous pollutants include hazardous wastes, poisonous by-products, and compounds that have toxic qualities which the environment cannot absorb. As a result, pollution endangers environmental quality, human health, and natural and man-made resources. 

A business takes abundant resources from the environment in terms of raw material, wood, air, water etc in order to run its business. Hence, it is fair enough that the business pays back to the society and the environment by protecting, preserving as well as conserving the environment.

A business is responsible through its commitment from the company's senior management to establish, maintain and grow a work culture that promotes environmental preservation and pollution prevention.

12. Enumerate any three responsibilities of business towards employees.

Ans: The following are three company responsibilities towards employees: 

• Provide appropriate working conditions in order to gain employee collaboration.

• The company must respect the employees' democratic freedom to form unions.

• A fair wage and a fair deal from management must also be guaranteed to the employee.

13. Why should a business assume social responsibility?

Ans:  The businesses should assume social responsibility because:

1. Improving Companies Brand:

• A company's image and brand can be built through being socially responsible.

• A corporation can establish a reputation for being not just financially successful but also socially aware by creating a positive image.

2. Engaging Customer

• A social responsibility policy can impact the buying decision of the customers.

• Some buyers are ready to pay a higher price for a product if they know that a percentage of the proceeds will go to a good cause.

3. Retaining Top Talent

• Many employees want to feel like they are a part of something bigger.

• Social responsibility and powers employees to leverage the corporate resources at their disposal to do good.

4. Helping Company Stand Out of Competition

• Companies that are involved in the community stand out from the crowd.

• Improving the brand's image by cultivating relationships with customers and their communities.

14. Explain the major cause of environmental pollution.

Ans: The major causes of environmental pollution are:

1. Air Pollution:

• It is primarily due to automotive emissions of carbon monoxide, which contribute to air pollution. Similarly, manufacturing plants damage the air with smoke and other toxins.

• As a result of the pollution, a hole in the ozone layer has been formed, thus leading to severe global warming.

2. Water Pollution

• Chemical and garbage disposal are the primary causes of water pollution. 

• Water contamination has killed a number of animals and is a severe threat to human life.

3. Land Pollution

• Land pollution occurs when harmful waste is dumped on it. 

• This degrades the land's quality, rendering it unsuitable for cultivation or plantation.

4. Noise Pollution

• Noise pollution from industry and cars is not only an irritation, but also a major health threat. 

• Noise pollution has been linked to a variety of illnesses, including hearing loss, heart failure, and mental illness.

15. Define business ethics and explain its significance?

Ans: Ethics are concerned with what is right and what is wrong in human behavior judged on the basis of a standard form of conduct/behavior of individuals, as approved by the society in a particular field of activity. The relationship between company objectives, procedures, and processes and the society welfare is the subject of business ethics.

The moral principles, and the socially defined behaviour which governs a business and its activities is referred to as business ethics. Ethical business is a good business. Ethical business behavior improves public image, earns people's confidence, and leads to greater success.

Business Ethics is important due to the following points:

• It helps to establish a company's image and brand.

• It has an impact on clients' purchasing decisions.

• Employees believe they are a part of a trustworthy and ethical company.

• It helps to have an edge in a competitive market.

16. LMN Ltd. is filing its income tax returns on time. They are also updating their shareholders about their projects and providing for return to them. Towards which interest group are they fulfilling their responsibility? Which values are being followed by the Co.?

Ans: They are fulfilling their responsibilities towards the shareholders, owners, and the government. 

An organization must offer regular, accurate, and complete information to its shareholders regarding its operations as well as future growth plans. The job of the commercial enterprise is to offer a fair return to the shareholders or owners. An organization must adhere to the country's rules and pay taxes to the government on a timely and accurate basis.

The following are the values that the company adheres to:

• Legal Responsibility: Every business has a legal obligation to follow the laws of the state, as the business who follows the legal aspects of the country is said to be a socially responsible business. By paying the tax returns on time, the business is fulfilling its legal responsibilities.

• Ethical Values: The company offers regular updated information to its shareholders, along with consistent returns. Hence, it is following the ethical values of fairness, transparency etc.

17. A B C Ltd. deals in health drinks. It is found that there are components of pesticides in their drinks. Mention which 2 kinds of responsibilities and 2 values are missing from this approach.

Ans: Two Kinds of Responsibility missing from the company’s approach are as follows:

• Ethical Responsibility: Socially acceptable behavior that is not prescribed in law. There is an involvement of voluntary action in performing this responsibility

• Legal Responsibility: Every business has a legal obligation to follow the laws of the state, as the business who follows the legal aspects of the country is said to be a socially responsible business.

Two Kinds of values missing from the company’s approach are as follows:

• Social Value: When a company's primary purpose is "service to society," it and its image stand to profit the most in the long run. If a company performs its social obligation, it benefits itself. The public image of any firm would also be improved when it supports social goals which are missing in the company, as the company failed to provide service to society by providing them with safe and healthy health drinks.

• Honesty and Transparency: The company claims its products to be ‘health’ drinks, despite the fact that it has pesticides and chemicals in it, which could jeopardize the health of the consumers. The company sure lacks the essence of honesty and transparency in its values.

18. XYZ Co. is providing facilities for their female staff like day care centres for kids and work from home facilities. By doing this they are following social responsibilities towards which interest group? Also, what values are they presenting?

Ans: They are following social responsibility towards the staff or employee group. The right kind of working conditions to be given so that it can win the cooperation of staff. The company is providing work from home opportunities to female staff, along with day care facilities, hence the company is being empathetic towards its staff, and treating them with dignity and respect.

In the above case, the company us showcasing the the following values:

1. Social Values: By treating the female staff with dignity and respect, and providing for the day care facilities and work from home opportunity, the company is showcasing the social values of cooperation, understandability, empathy etc.

Also, the values of autonomy and freedom are also showcased towards women. As mothers and professionals at the same time, the woman feels more empowered and autonomous to work and continue their professional careers without worrying about their children.

Long Answer Questions (5 or 6 marks) 

19. Explain the forces which are responsible for increasing concern of business enterprises towards social responsibility.

Ans: The forces are as follows: 

1. The Interests of Stakeholders:

• To get the support of employees, it has become necessary for organizations to discharge its possibility towards their employees.

• Also, the customer does not purchase what is being provided to him, he buys what he wants. As a result of consumer sovereignty, firms have been pushed to take social responsiveness toward them, as satisfying social commitments is good for the enterprises' long-term survival.

2. Long-Run Survival:

• When the firm's primary purpose is to serve society, the firm and its image stand to gain the most benefit in the long term.

• If a company performs its social obligation, it benefits itself.

• When a company promotes social aims, its public image improves, which further leads to long term survival and success of the business.

3. Self-Enlightenment:

• With increase in the level of education and understanding of businesses that they are the creations of the society, they are motivated to work for the cause of social good.

• Rather than legislative interference being the cause of social responsibility, firms have human social responsibility on their own.

4. Government Regulation:

• Businessmen are said to be able to avoid government regulation by voluntarily taking on social duties, which helps to lessen the need for new legislation.

• The Central Pollution Control Board, for example, is in charge of environmental pollution issues, and in case the company does not adhere to the norms of this board, the board can take serious consequences against it.

5. Resources:

• There are abundant resources available with the organizations that hold the power to partly solve the social problems.

• Businesses are dependent on society and its resources in indescribable ways, hence it is fair enough that it pays back the society both economically and socially.

6. Business Responsible for Social Problems:

• Businesses have either generated or perpetuated social problems, hence it has a moral obligation to get involved in tackling these challenges rather than relying on other social institutions to do so.

7. Pressure of Labour Movement:

• The labour movement has grown in strength around the world in order to obtain gains for the working class.

• This has compelled businesses to consider the welfare of their employees rather than pursuing a "hire and fire" policy.

8. Impact of Consumer Consciousness:

• Development of education and Mass media and increasing competition in the market has made the consumer conscious  of his right and power in determining market forces.

• Now, the customer is the king and is much aware of his rights, hence the businesses have started following a customer oriented  approach, to keep them happy and satisfied.

9. Development  of Social Standard for Business:

• Various social standards have been set for business in terms of its responsibilities towards various interest groups, hence it becomes crucial for the firms to adhere to these social standards and contribute to the society in order to ensure its long run survival.

• There is no way to run a business without interacting with the rest of the world.

• Relationship between social interest and business interest:

• Companies have begun to recognize that social and business goals are not mutually exclusive. They are, instead, complementary to one another.

• The long-term benefit of business is in providing good service to society.

10. Development of Professional, Managerial Class:

• Professional managers are more concerned in fulfilling a variety of interest groups in society when it comes to running their business than simply making a profit.

20. It is in the interest of business to fulfill its social responsibilities towards different interest groups. Explain?

Ans: The responsibilities that the businesses are supposed to fulfill in the interest of different interest groups are:

1. Responsibility towards the Shareholders or Owners:

• Shareholders must also be given regular, accurate, and complete information about the company's operations and growth plans.

• The responsibility of a business enterprise is to provide a profit to its shareholders or owners.

2. Responsibility towards the Workers:

• The right kind of working condition to be given so that it can win the cooperation of the workers.

• The company must respect the workers' democratic freedom to form unions.

• The worker must also be assured of a fair wage and a fair deal from the management.

3. Responsibility towards the Consumers:

• The obligation of an organization towards its customers is to provide the correct quality and quantity of goods and services to consumers at fair pricing.

• Adulteration, poor quality, a lack of required services and civility to consumers, misleading and dishonest advertising, and so on must all be avoided by the business.

4. Responsibility towards the Government and Community:

• An organization must follow the rules of the country and pay taxes on a timely and accurate basis.

• It must act like a good citizen and adhere to the society's widely accepted values.

21. MNO Ltd., A renowned computer company follows the vision of "reaching new heights with its people on its side"', It not only provides quality products but also provides various facilities to its employees for 5 years of service. It also provides computer skills to youth in remote areas for free.

(a) What according to you are the business ethics of the company?

Ans: 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. The relationship between company objectives, procedures, and processes and the good of society is the subject of business ethics. The socially decided moral norms that should regulate company activity are referred to as business ethics. Ethical business is good business. For example honesty, transparency, social welfare, integrity etc.

(b) Is it fulfilling its social responsibilities towards which interest groups?

Ans:  It is fulfilling social responsibility towards its customers, employees and society.

• Customers: The company provides quality products to its customers. 

• Employees: It provides various facilities to their employees for their 5 years service. 

• Society/ Community: The company is also providing computer skills to youth in remote areas free of cost, which in turn will lead to skilled India, and make the youth capable of finding a suitable job for themselves. Also, due to this, the growth in rural areas would be made possible.

22. There is a group discussion taking place in class XI regarding social responsibility of business' Ravi feels that a business should be socially responsible towards the society it exists in while shama is against it as the basic objective of a business is to earn projects. Whom do you think you will favour? Write points with respect to your opinion.

Ans: I will favour Ravi. Social responsibility is important for the success of the business. The following points highlights the importance of social responsibility:

1. Protect the Interests of Stakeholders:

• To get the support of employees, it has become necessary for organizations to discharge its possibility towards their employees.

• The customer does not purchase what is being provided to him, he buys what he wants. Hence, as a result of consumer sovereignty, firms have been pushed to take social responsiveness toward them, as satisfying social commitments is good for the enterprises' long-term survival.

2. Long-Run Survival:

• When the firm's primary purpose is to serve society, the firm and its image stand to gain the most benefit in the long term.

• If a company performs its social obligation, it benefits itself.

• When a company promotes social aims, its public image improves as well, which further leads to the long term survival and success of the business.

3. Avoids Government Regulation:

• Government regulations are unwelcome because they stifle individual liberty.

• Businessmen are said to be able to avoid government regulation by voluntarily taking on social duties, which helps to lessen the need for new legislation.

• For example, the Central Pollution Control Board takes care of issues related to environmental pollution, and if a business firm follows appropriate measures to avoid environmental pollution, then the interference of the said board could be reduced. 

• Given the vast financial and personnel resources at its disposal, it can assist society in better addressing its challenge.

4. Professionalization and Better Environment:

• Businesses are becoming more socially oriented as management becomes more professional.

• The ethics of profession by and manager to social values and growing concern for society.

• A society with fewer problems provides a better environment for a firm to conduct its business.

5. Business Responsible for Social Problems:

• Business businesses have either generated or perpetuated social problems.

• Business has a moral obligation to get involved in tackling these challenges rather than relying on other social institutions to do so.

6. Converting Problems into Opportunities:

• Business with its history of converting risky situations into two profitable deals, can not only solve social problems but it can also make them effectively useful by accepting the challenge.

7. Resource Utilisation:

• Businesses have abundant financial, managerial, technical resources. Hence, these resources can be put to use into solving various social challenges and issues.

23. State the factors against social responsibility?

Ans: The factors against social responsibility are:

1. Violation of Profit Maximization Objective:

• Business exists mainly for profit maximization. Hence social responsibility is somewhat contradictory to the primary objective of profit maximization.

• Profit maximization through higher efficiency and lower costs is the best way for business to fulfil its social obligation.

2. Burden on Consumers:

• Pollution control and environmental protection, like social responsibility, are very expensive and frequently necessitate financial commitment.

• Instead than bearing the burden of social responsibility, they simply pass it to the consumer by demanding a greater price.

3. Lack of Social Skills:

• Businesspeople lack the essential knowledge and training to solve social issues.

• Other specialized agencies should deal with social issues.

4. Lack of Broad Public Support:

• Business engagement or meddling in social programmes is disliked by the general public.

• As a result, businesses are unable to thrive due to a lack of public trust in collaborative efforts to solve societal problems.

24. Describe the role of social responsibility in today's era?

Ans: The role of social responsibility is explained in the following points:

1. Threat to Public Regulation:

• Action is taken to regulate business entities that operate in a socially irresponsible manner in order to protect the interests of the public.

• One of the main reasons why businesses are concerned about social responsibility is the fear of government regulation.

• Hence social responsibility plays an important role in protecting the interests of the public, and avoiding any threat from them as well as the government.

2. Pressure of Labour Movement:

• The labour movement has grown in strength around the world in order to obtain gains for the working class.

• This has compelled businesses to consider the welfare of their employees rather than pursuing a "hire and fire" policy.

3. Impact of Consumer Consciousness:

• Development of education and Mass media and increasing competition in the market has made the consumer conscious  of his right and power in determining market forces.

• Now, the customer is the king and is much aware of his rights, hence the businesses have started following a customer oriented  approach, to keep them happy and satisfied.

4. Development  of Social Standard for Business:

• Various social standards have been set for business in terms of its responsibilities towards various interest groups, hence it becomes crucial for the firms to adhere to these social standards and contribute to the society in order to ensure its long run survival.

• There is no way to run a business without interacting with the rest of the world.

5. Development of Business Education:

• More and more individuals are becoming aware of the social purpose of business as a result of its rich content on social responsibility.

6. Relationship between Social Interest and Business Interest:

• Companies have begun to recognize that social and business goals are not mutually exclusive. They are, instead, complementary to one another.

• The long-term benefit of business is in providing good service to society.

7. Development of Professional, Managerial Class:

• Professional management education at universities and specialized management schools has resulted in the formation of a distinct class of professionals.

• Professional managers are more concerned in fulfilling a variety of interest groups in society when it comes to running their business than simply making a profit.

25. What is the need to control pollution and how should businesses contribute to environmental protection?

Ans:  The need for Pollution Control is:

• To Reduce Health Risks: There is mounting evidence that pollution in the environment causes various diseases such as cancer, heart attacks, and lung difficulties. Hence, there is an urgent need to control pollution.

• To Reduce Risk of Liability: It is conceivable for a company to be held accountable for compensating people who have been harmed by the toxicity of gaseous, liquid, or solid pollutants it has released into the environment.

• Cost Savings: Faulty manufacturing technology produces more trash, resulting in higher waste disposal and facility cleaning costs. Therefore steps to control pollution will ultimately help the firms to save their costs and expenses.

• Improved Public Image: A company that advocates for environmental causes will have a positive reputation and be seen as a socially responsible business.

• Other Social Benefits: Controlling pollution has a number of other advantages, including improved visibility, cleaner buildings, a higher quality of life, and the availability of natural resources in their purest form.

Role of Business in Environment Protection:

• Organizational Commitment: It shows the commitment an organization has towards the environment of which it is a part. The firm’s commitment can be seen by the company's senior management building, maintaining, and developing a work culture that promotes environmental protection and pollution prevention. Assuring that the company's commitment to environmental preservation is shared by all divisions and workers.

• Policies and Programmes: Through the formulation of defined policies and programmes for acquiring high-quality raw materials, using advanced technology, employing scientific waste disposal, treatment procedures, and improving employee skills, the firm can contribute in environment protection and conservation.

• Rules and Regulations:  Adherence to the government's pollution-prevention rules and regulations is another way a firm can fulfil its role towards environment preservation.

• Participation: The firm's participation in government programmes aimed at preventing deforestation, managing dangerous substances, cleaning up dirty waterways, and planting trees also leads to environmental protection and conservation.

• Evaluation: The firms conduct periodic evaluation of pollution control programmes in terms of costs and benefits so as to improve environmental protection efforts.

• Organizing Workshops: The firm’s efforts into organizing educational workshops and training materials to share technical knowledge and expertise with suppliers, dealers, and customers also contributes towards pollution control programmes.