Social responsibilities of business and business ethics.


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Social responsibilities of buiseness and business ethics. its for class 11th commerce
subject :- business studies.

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Social responsibilities of business and business ethics.

  1. 1. A business enterprise should do business and earn money in ways thatfulfill the expectations of the society. Every individual living in society hascertain obligations towards society. He has to respect social values andnorms of behaviour. A business enterprise ispermitted by society to carry on industrial or commercial activities andthereby earn profits. But it is obligatory on part of the business enterprisenot to do anything, that is undesirable from society’s point of view.Manufacture and sale of adulterated goods, makingdeceptive advertisements, not paying taxes which are due, polluting theenvironment and exploiting workers are some examples of sociallyundesirable practices which may increase the profit of enterprises butwhich have adverse effect on society at large. On the other hand, supplyinggood quality goods, creating healthy working conditions, honestly payingtaxes prevention/installing pollution devices in the factory, and sincerelyattending to customer complaints are examples of socially desirablepractices which improve the image of enterprises and also make themprofitable. In fact, it is through socially responsible and ethically uprightbehaviour that business enterprises can get durable success.
  2. 2. (i) Justification for existence andgrowth(ii) Long-term interest of the firm:(iii) Avoidance of governmentregulation:.(iv) Maintenance of society:(v) Availability of resources withbusiness:(vi) Converting problems intoopportunities:vii) Better environment for doingbusiness:(viii) Holding business responsiblefor social problems:
  3. 3. (i) Violation of profit maximisationobjective: According to this argument,business exists only for profitmaximisation. Therefore, any talk ofsocial responsibility is against thisobjective. In fact, business can bestfulfill its social responsibility if itmaximises profits through increasedefficiency and reduced costs.(ii) Burden on consumers: It is arguedthat social responsibilities like pollutioncontrol and environmental protectionare very costly and often require hugefinancial investments. In suchcircumstances, businessmen are likelyto simply shift this burden of socialresponsibility by charging higher pricesfrom the consumers instead of bearingit themselves. Therefore, it is unfair totax the consumers in the name of socialresponsibility.
  4. 4. (iii) Lack of social skills: All socialproblems cannot be solved the waybusiness problems are solved. In fact,businessmen do not have the necessaryunderstanding and training to solvesocial problems. Therefore, accordingto this argument, social problemsshould be solved by other specialisedagencies.(iv) Lack of broad public support:Here the argument is that the public ingeneral does not like businessinvolvement or interference in socialprogrammes. Therefore, businesscannot operate successfully because oflack of public confidence andcooperation in solving social problems.
  5. 5. (i) Threat of public regulation:(ii) Pressure of labour movement:iii) Impact of consumer consciousness:(iv) Development of social standardfor business:(v) Development of businesseducation:(vi) Relationship between socialinterest and business interest:(vii) Development of professional,managerial class:
  6. 6. (a) Economic responsibility: Abusiness enterprise is basically aneconomic entity and, therefore, itsprimary social responsibility iseconomic i.e., produce goods andservices that society wants and sellthem at a profit. There is littlediscretion in performing thisresponsibility.(b) Legal responsibility: Everybusiness has a responsibility tooperate within the laws of the land.Since these laws are meant for thegood of the society, a law abidingenterprise is a socially responsibleenterprise as well.
  7. 7. (c) Ethical responsibility: This includes thebehaviour of the firm that is expected bysociety but not codified in law. For example,respecting the religious sentiments anddignity of people while advertising for aproduct. There is an element of voluntaryaction in performing this responsibility.(d) Discretionary responsibility.This refers to purely voluntary obligation thatan enterprise assumes, for instance,providing charitable contributions toeducational institutions or helping theaffected people during floods or earthquakes.It is the responsibility of the companymanagement to safeguard the capitalinvestment by avoiding speculative activityand undertaking only healthy businessventures which give good returns oninvestment.
  8. 8. (i) Responsibility towards theshareholders or owners: A businessenterprise has the responsibility toprovide a fair return to the shareholders orowners on their capital investment and toensure the safety of such investment. Thecorporate enterprise on a company form oforganisation must also provide theshareholders with regular, accurate and fullinformation about its working as well asschemes of future growth.(ii) Responsibility towards theworkers: Management of an enterprise is alsoresponsible for providing opportunities to theworkers for meaningful work. It should try tocreate the right kind of working conditions sothat it can win the cooperation of workers. Theenterprise must respect the democratic rights ofthe workers to form unions. The worker mustalso be ensured of a fair wage and a fair dealfrom the management.
  9. 9. (iii) Responsibility towards theconsumers: Supply of right quality and quantityof goods and services to consumers atreasonable prices constitutes the responsibility ofan enterprise toward its customers. Theenterprise must take proper precaution againstadulteration, poor quality, lack of desired serviceand courtesy to customers, misleading anddishonest advertising, and so on. They must alsohave the right of information about the product,the company and other matters having a bearingon their purchasing decision.(iv) Responsibility towards thegovernment and community: Anenterprise must respect the laws of thecountry and pay taxes regularly andhonestly. It must behave as a goodcitizen and act according to the wellaccepted values of the society. It mustprotect the natural environment andshould avoid bad, effluent, smokychimneys, ugly buildings dirty workingconditions. It must also develop aproper image in society through
  10. 10. Protection of the environment is aserious issue that confronts businessmanagers and decision makers. Theenvironment is defined as the totalityof man’s surroundings — both naturaland man-made. These surroundingsare also in the nature of resources, thatare useful for human life. The resourcesmay also be called natural resourceslike land, water, air, fauna and flora andraw materials; or man-made resourcessuch as cultural heritage, socioeconomicinstitutions and the people.It is widely recognised that the qualityof the environment is fast deterioratingparticularly due to industrial activity.This is a common sight around majorcities like Kanpur, Jaipur, Delhi,
  11. 11. It must be recognised that all sectorsof our society viz., industry,government, agriculture, mining,energy, transportation, construction,and consumers generate waste. Wastescontain pollutants which are thematerials of chemicals that have beendiscarded during the process ofproduction or consumption. Pollutionis caused by these pollutants which arereleased into the environment beyondits assimilation capacity. Among thevarious sources of pollution, industryis a major generator of waste in termsof both its quantity and toxicity.Business activities such as production,distribution, transport, storage,consumption of goods and services areknown to be the most critical sources
  12. 12. (i) Air pollution: Air pollution is theresult of a combination of factors whichlowers the air quality. It is mainly dueto carbon monoxide emitted byautomobiles which contributes to airpollution. Similarly, smoke and otherchemicals from manufacturing plantspollute the air. Resultant air pollutionhas created a hole in the ozone layerleading to dangerous warming ofthe earth.(ii) Water pollution: Water becomespolluted primarily from chemical andwaste dumping. For years, businessenterprises have been dumping wasteinto rivers, streams and lakes with littleregard for the consequences. Waterpollution has led to the death of severalanimals and posed a serious threat tohuman life.
  13. 13. (iii) Land pollution: Dumping of toxicwastes on land causes land pollution.This damages the quality of landmaking it unfit for agriculture orplantation. Restoring the quality of theland that has already been damaged isa big problem.(iv) Noise pollution: Noise caused bythe running of factories and vehiclesis not merely a source of annoyancebut is also a serious health hazard.Noise pollution can be responsiblefor many diseases like loss of hearing,malfunctioning of the heart andmental disorder.
  14. 14. (i) A definite commitment by top management of the enterprise to create,maintain and develop work culture for environmental protection and pollutionprevention.(ii) Ensuring that commitment to environmental protection is sharedthroughout the enterprise by alldivisions and employees.(iii) Developing clear-cut policies and programmes for purchasing goodquality raw materials, employing superior technology, using scientifictechniques of disposal and treatment of wastes anddeveloping employee skills for the purpose of pollution control.(iv) Complying with the laws and regulations enacted by the Government forprevention of pollution.(v) Participation in government programmes relating to management ofhazardous substances, clearing up of polluted rivers, plantation of trees, andchecking deforestation.(vi) Periodical assessment of pollution control programmes in terms of costsand benefits so as to increase the progress with respect to environmentalprotection.(vii) Arranging educational workshops and training materials to sharetechnical information and experience with suppliers, dealers and customersto get them actively involved in pollution control programmes.
  15. 15. (i) Top management commitment:(ii) Publication of a ‘Code(iii) Establishment of compliancemechanisms:(iv) Involving employees at alllevels:(v) Measuring results: