Class 11

Business Studies
Chapter - 6

SOCIAL RESPONSIBILITIES
OF B U S IN E S S
& BUSINESS ETHICS
 Social Responsibility
No business can survive without the
support of society

Therefore, it has some responsibilities to the

society
 Social Responsibility
Social responsibility means the obligations of the
businessmen which are desirable in terms of the
objectives and values of our society
 Arguments for
Social Responsibility
Arguments for Social Responsibility
1 Existence and growth

Prosperity and growth of business is possible only

through rendering continuous service to society
 Arguments for Social Responsibility
2 Long term interest of the firm
A firm and its image stands to gain more profits in
the long run when it accepts service as the
highest goal

Supporting social goals enhances public image of any firm

Arguments for Social Responsibility
3 Avoidance of government regulations

Businessman should voluntarily assume social

responsibilities, so that they can avoid government
regulations. Eg: Environmental pollution
Arguments for Social Responsibility
4 Maintenance of society

If the people feel that they are not getting their due from the
business, they will not support such business
organisations
Arguments for Social Responsibility
5 Availability of resources
with business

Available resources with the business such as managerial talent

and financial resource can be utilized to solve the problems of
the society when it is needed
Arguments for Social Responsibility
6 Converting problems into
opportunities

Business is always looking for converting risky situations to

opportunities, this quality can be utilized for solving the
problems in the society
Arguments for Social Responsibility
7 Better environment for doing
business

A society with fewer problems and complaints provides

better environment for the business
Arguments for Social Responsibility
8 Holding business responsible for
social problems

Some of the social problems such as pollution, unsafe work

environment, discrimination in employment etc. are created
by business enterprises themselves, so that it is their moral
obligation to solve them
 Arguments For Social Responsibility
1.Existence and growth
2.Long term interest of the firm
3.Avoidance of government regulations
4.Maintenance of society
 Arguments For Social Responsibility
5.Availability of resources with business
6.Converting problems into opportunities
7.Better environment for doing
business 8.Holding business
problems
responsible for social
 Arguments Against
Social Responsibility
Arguments Against Social Responsibility
1 Violation of objective
Business is an economic entity and its main
objective is profit maximization

If the business organizations are engaged in

social activities their profit will be reduced
It will affect the success of business
Arguments Against Social Responsibility
2 Burden on consumers
The cost of social responsibility will be shifted to the
consumers by charging higher prices
Arguments Against Social Responsibility
3 Lack of social skill
It is an argument that the business people have no skill to take
up social work as they are always engaged in business
activities
Arguments Against Social Responsibility
4 Lack of public support
Public usually do not like business interference in social
programs, so that they cannot operate successfully in such
areas
Arguments Against Social Responsibility
1.Violation of objective
2.Burden on consumers
3.Lack of social skill
4.Lack of public support
Reality of Social
Responsibility
 Reality of Social Responsibility
1 Threat of public regulation
When business enterprises act in a socially
irresponsible manner, government will act by
regulating them for safeguarding public interest
 Reality of Social Responsibility
2 Pressure of labour movement
Labour movement has become very powerful now-
a- days, so that the businessmen are forced to
protect the interest of the workers
 Reality of Social Responsibility
3 Consumer consciousness
Business enterprises have started customer
oriented policies as they are aware about their
rights and privileges
 Reality of Social Responsibility
4 Development of social standard for business

Newly developed social standards consider only legitimate

economic activities along with serving the society, then only the
business can survive and grow
 Reality of Social Responsibility
5 Development of business education
Because of development of business education,
people are aware of the social purpose of business
 Reality of Social Responsibility
6 Relationship between social interest and
business interest
Businessmen have realized that social interest and
business interest are not contradictory, but they are
complementary to each other
 Reality of Social Responsibility
7 Development of professional managerial class

Professional management education has created a class of

professional managers who have got a positive attitude towards
the social responsibility as compared to the earlier class of
owner managers
 Reality of Social Responsibility
1.Threat of public regulation
2.Pressure of labour movement
3.Consumer consciousness
4.Social standards for business
5.Business education
6.Social interest and business interest
7.Professional managers
Kinds of Social
Responsibility
 Kinds of Social Responsibility

1 Economic responsibility

Since the business is an economic entity, it has to

produce goods and services that society wants and sells
them at a profit
 Kinds of Social Responsibility

2 Legal responsibility

Business enterprises have the responsibility to

operate within the laws of the country
 Kinds of Social Responsibility
3 Ethical responsibility
It refers to the moral principles to be followed by
the businessmen in relation to the society

Eg: Protecting religious sentiments and dignity of people

while advertising a product
 Kinds of Social Responsibility
4 Discretionary responsibility
This is voluntary obligation of a business enterprise

Eg: giving charity to an educational institution, helping

people in natural calamities etc.
 Kinds of Social Responsibility
1. Economic responsibility

2.Legal responsibility

3.Ethical responsibility

4.Discretionary responsibility
 Social Responsibility
towards different interest
groups
Social Responsibility towards different interest groups

1 Shareholders / Owners
a) Safety of investment.
b) Adequate return on investment.
c) Accurate financial information should be provided.
Social Responsibility towards different interest groups

2 Workers / Employees
a) Fair wages
b)Job security c)Promotion
opportunities d)Welfare
measures
e)Better working conditions.
f)Participation in management.
Social Responsibility towards different interest groups

3 Consumers
a)Regular supply of commodities.

b) Better quality

c) Reasonable Price

d) Avoidance of unfair trade practices.

Social Responsibility towards different interest groups

4 Government and Community

a) Lawful business.
b) Prompt payment of tax.
c) Help the government in socio-economic
development (employment opportunities, literacy, poverty
etc.)
d)Optimum use of natural resources. e)Concentrate in
safety and welfare of the people.
f)Control pollution as far as possible.
 Interest groups of business
1.Owners
2.Emp
loyees
3.Consumers
4.Gov
ernment &
Community
Business and
Environmental
Protection
Business and environmental protection
The health and well being of people depends on
the quality of environment in which they
live and work

Better
Environment
Business and environmental protection
Rapid industrialization and growing traffic
have caused a great damage to the
environment
Business and environmental protection
Pollution is the injection of harmful
substances into the environment largely
because of industrial production

It changes the physical, chemical and biological

characteristics of air, water and land
Causes and Types of
Environment
Pollution
 Causes & Type of Pollution
1 Air Pollution
It is the contamination of air by the accumulation of
harmful or toxic substances which will create serious
health problems to living organisms, monuments etc.
 Causes & Type of Pollution
2 Water Pollution
Water is said to be polluted when it is changed in the
quality as a result of waste disposal and other human
activities, so that it become less suitable for drinking
 Causes & Type of Pollution
3 Land / Soil Pollution
It may be due to the dumping of non-degradable waste material
into the land from industrial units, hospitals, hotels, dwelling
units etc.

This damages the quality of soil making it unfit for

cultivation
 Causes & Type of Pollution
4 Noise / Sound Pollution
Noise pollution can be defined as any disturbing or
unwanted noise that interferes or harms humans or
wildlife

Industrial units, Auto mobiles etc. are the major sound

pollutants
Causes & Type of Pollution
Air
Pollution

Noise Water
Pollution Pollution Pollution

Land
Pollution
Reasons / Need for
Pollution Control
Reasons / Need for Pollution Control
1 Reduction of health hazards
Major diseases like cancer, heart attacks etc. are
caused by pollutants in the environment

Pollution control measures only can prevent such

diseases up to a certain extent
 Reasons / Need for Pollution Control
2 Reduce risk of liability
In case a disaster has been taken place, the entire
liability should be borne by the enterprise

E.g. Union Carbide Tragedy in Bhopal

Reasons / Need for Pollution Control
3 Cost savings
Effective pollution control strategy helps to reduce
cost of operating business

If they use improper technology with greater

wastes leading to high waste disposal cost
Reasons / Need for Pollution Control
4 Public image
A business enterprise which follows good
pollution control measures can enjoy good
reputation in the society
Reasons / Need for Pollution Control
5 Other social benefits
It includes clear visibility, clean buildings and
monuments, quality life and availability of pure
natural products

Taj Mahal
Reasons / Need for Pollution Control

1.Reduction of health hazards

2.Reduce risk of liability 3.Cost
savings
4.Public image 5.Other
social benefits
Role of Business in
Environmental
Protection
 Role of business in environmental protection

1 Work culture

Top management should create a work culture

for environmental protection and pollution control
Role of business in environmental protection

2 Ideas and information to employees

Share the ideas and technical information
regarding environmental protection among the
employees
Role of business in environmental protection

3 Good quality materials

Use good quality materials to reduce
environmental pollution
Role of business in environmental protection

4 Modern Technology
Adopt modern technology
Role of business in environmental protection

5 Rules and regulations

Follow the rules and regulations by the
government
 Role of business in environmental protection

6 Scientific methods
Adopt scientific methods of waste management
 Role of business in environmental protection

7 Support in Govt. Programs

Support in government programs like clearing up of
polluted water sources, plantation of trees, checking
deforestation etc.
 Role of business in environmental protection

8 Timely assessment
Timely assessment of pollution control programs
Role of business in environmental protection
1. Good work culture

2.Ideas and information to employees

3.Use good quality materials

4.Adopt modern technology

 Role of business in environmental protection

5. Follow the rules and regulations

6.Scientific methods of waste management

7.Support in Govt. Programs

8.Timely assessment of pollution control

Business Ethics
 Business Ethics

The word “ethics” derived from the Greek word

“ethos” which means character or sentiments of
community

Ethics specifies what is good or bad, fair or unfair,

right or wrong
 Business Ethics

Business ethics refers to the moral principles

followed by a businessman in his dealings with the
people

Eg: Better quality, fair price, justice, courage,

thrift etc.
 Business Ethics

Business ethics helps to win the confidence of

customers which will ensure the prosperity and
progress of the business
Ethical Business Practices
 Ethical Business Practices
1 Fair and Reasonable Price
 Ethical Business Practices
2 Correct weight and measures
 Ethical Business Practices
3 Prompt payment of tax

Disclose actual profit and prompt payment of tax

 Ethical Business Practices
4 Fair treatment to the employees
 Ethical Business Practices
5 Sale of genuine products
 Ethical Business Practices
6 Reasonable profit
 Ethical Business Practices
7 No bribes
Examples of ethical business practices:
●
Fair and reasonable price
●
Correct weight and measures
●
Prompt payment of tax
●
Fair treatment to the employees
●
Sale of genuine products to customers
●
Take reasonable profit
●
No bribes
Examples of unethical
business practices
 Unethical Business Practices
1 Adulteration
 Unethical Business Practices
2 Poor quality
 Unethical Business Practices
3 Black marketing and Hoarding
Unethical Business Practices

Misleading advertisement
 Unethical Business Practices
5 Fake goods
 Unethical Business Practices
6 Deceptive packing
 Unethical Business Practices
7 Pollution of environment
 Unethical Business Practices
8 Exploitation of workers
 Common unethical business practices:
●
Adulteration
●
Poor quality
●
Black marketing and hoarding
●
Misleading advertisements
●
Fake goods
●
Deceptive packaging
●
Pollution of environment
●
Exploitation of workers
 Elements of
Business Ethics
 Elements of Business Ethics

1 Top Management Commitment

The top level managers need to be openly
strong in ethical matters, so that they can guide
their organization towards ethically upright
behaviour
 Elements of Business Ethics

2 Publication of a “Code”
Code means a written document which contains the
moral principles to be followed by the organization

Eg: Honesty, adherence to laws, quality, health and safety in

workplace, employment practices fairness in selling etc.
 Elements of Business Ethics

3 Compliance Mechanism
A suitable mechanism should be introduced to ensure
that actual decisions and practices comply with firm’s
ethical standards

Eg: Paying attention to values and ethics in

recruiting employees
 Elements of Business Ethics

4 Involving Employees at all Levels

Involvement of employees in all the levels in ethical
programs is a must, then only they can do accordingly

Eg: Conducting a group discussion among the employees in

small groups to discuss the ethical policies to be followed in
the firm
 Elements of Business Ethics

5 Measuring Results
The firm can monitor the actual performance with
ethical standards and they can take necessary steps for
further course of action
 Elements of Business Ethics
●
Top management commitment
●
Publication of a Code
●
Compliance Mechanism
●
Involvement of employees
●
Measuring results