SOCIAL

RESPONSIBILITY
OF BUSINESS
GROUP 2
MASCARIÑAS,MONECILLO,TARUC

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 Social Responsibility
of Business
q Businessmen has an obligation to run the
business in different lines which make the
business desirable from the point of view of
society.
q Traditionally, the term business commonly
referred to commercial activities aimed at
making a profit for the owners.

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2 different Facets of Social
Responsibility
q Businessmen recognize that since they are
managing an economic unit in the society, they
have a broad obligation to the society with
regard to matters affecting employment,
availability of goods and inflation.
q Social responsibility refers to both socio-
economic and socio-human obligations of the
business.

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 Argument in Favor of Social
Responsibility of Business

q Business is a creation of society and

therefore it should respond to the
demands of the society.
q The self-interest of business is best
served by meeting the aspirations of
society.
q To improve the public image of
business.
q It is the moral thing to do.

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 Argument Against Social
Responsibility of Business
q Responsibility of Government.
q Conflicting considerations of private market
mechanism and social responsibility.
Market mechanism
§ It operates in a free market system, utilizing supply and
demand forces to establish stability, efficiency, and
resource allocation. It is an extension of Adam Smith’s
concept of the invisible hand, which guides economic
activities. Through the interaction of buyers and sellers,
market equilibrium is achieved, optimizing the
allocation of resources.
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 Argument Against Social
Responsibility of Business
1. Signaling function – As the term suggests, any price
changes will signal the market participants, who can then
influence the supply and demand forces in the market. So,
when a company lowers the price, the consumers will buy
more, thus increasing demand, altering supply, and so on.
2.Incentives function – This function concerns producers, who
are incentivized to produce more with any changes in price or
other factors. For example, during the onset of the COVID-19
pandemic, consumers would have bought facemasks at higher
prices too.
3.Rationing function – Economics is based on the scarcity of
resources. When this happens, supply falls, and demand
increases, causing a price hike. In such cases, customers ration
the goods by purchasing as much as they can afford or
switching to alternatives. Rationing a common practice during
war times.

q Disregard of Market Mechanism.

q Arbitrary Power to Businessmen.
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 Obligation of Business Towards
Different Segments of the Society
Reasonable dividend shareholders are a source of
funds for the company. They expect a high rate of
dividend on the money invested by them and also the
maximization of the value of their investment in the
company.
Obligations towards
Protection of assets: The assets of the company are
owners or shareholders: purchased with shareholders funds. Therefore the
company is responsible to safeguard these assets.

Information: It is the responsibility of the management

to keep the shareholder informed about the financial
position as well as the process of the company.

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 Obligation of Business Towards
Different Segments of the Society
§ To make goods of the right quality available to the right
people at the right time and place and at reasonable
prices.
§ To business should not indulge (involved) into unfair
practices such as black marketing, hoarding and
Obligations towards adulteration etc.
§ To provide prompt and courteous service to customers.
Customers § To handle customers grievances (complaint) carefully.
§ To distribute the goods and services properly so that the
customers do not face any difficulty in purchasing them.
§ To produce goods which meet the needs of the customer
who belong to different classes, taste and with different
purchasing power.

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 Obligation of Business Towards
Different Segments of the Society
FAIR WAGES: Business should pay reasonable salaries so that their
employee’s may lead a good life and satisfy their needs.
ADEQUATE BENEFITS: Employees should be provided like housing,
insurance cover, medical facilities and retirement benefits.
GOOD WORKING CONDITIONS: Good working conditions are
necessary to maintain the health of the workers. Therefor they must
be provided with good working conditions.
Obligations towards OPPORTUNITY FOR GROWTH: Business should give their
Employees: employees opportunity to develop their capabilities through training
and education.
RECOGNITION OF WORKER’S RIGHTS: The business should
recognize the worker’s right to fair wages, to form trade unions, to
collective bargaining etc.
CO-OPERATION: The business must win the co-operation of the
workers by creating the conditions in which workers are willing to
put forward their best efforts towards the common goals of the
business.

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 Obligation of Business Towards
Different Segments of the Society

q The business must create healthy

relations with the suppliers.
Management should deal with them
Responsibility towards
judiciously. They should be provided
Suppliers: with fair terms and conditions regarding
price, quality, delivery of goods and
payment.

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 Obligation of Business Towards
Different Segments of the Society
SOCIO-ECONOMIC OBJECTIVES: A business should not involved in
any practice which is not fair from social point of view. The business
should use the factors of production effectively and efficiently for the
satisfaction of needs of the society.
EMPLOYMENT OPPORTUNITIES: It is the responsibility of
management to help increase direct and indirect employment in the
are where it is functioning.
EFFICIENT USE OF RESOURCES: The resources at the command of
Obligation towards business belongs to the society. Therefore, the business should make
society: the best possible use of the resources at its disposal for the well being
of the society.
BUSINESS MORALITY: The business should not be indulge into anti-
social practices such as adulteration, hoarding and black marketing.
IMPROVING OF LOCAL ENVIRONMENT: Preventive measure against
water and air pollution. It can develop the surrounding area for the
well being of the employees and the general public. A business can
also contribute to the advancement of local amenities.

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 Obligation of Business Towards
Different Segments of the Society

q It is the duty of every business enterprise to

manage its affairs according to the laws
affecting it. It should pay taxes and other dues
Obligation towards honestly. It should not encourage corruption,
Government: black marketing, and other social evils. It should
discourage the tendencies of concentration of
economic power and monopoly and should
encourage fair trade practices.

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Thank You
For
Listening
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