CBSE Class 11 Business Studies Notes : Social Responsibilities of Buisness

1. Social Responsibility

Social responsibility is the obligation of businessmen towards the society. Businessmen must review the impact of their decisions and actions on the other sections of the society.

According to Peter F Druker, “Social responsibility requires managers to consider whether their action is likely to promote the public good, to advance the basic beliefs of our society, to contribute to its stability, strength and harmony.”

2. Need for Social Responsibilities

A businessman must perform social responsibilities because of the following reason

(i) Self interest
(ii) Better environment for business
(iii) Public image
(iv) Avoidance of government interference
(v) Social power
(vi) Resources used for moral justification
(vii) Contribution to social problems

3. The Case Against Social Responsibility

Some experts criticise the concept of social responsibility, some of the arguments given against social responsibilities are given below

(i) Motive of earning profit
(ii) Lack of social skill
(iii) Social responsibility involves cost
(iv) Dilution of basic goal of business
(v) Business are not moral agents
(vi) Reduction in competitiveness

4. Reality of Social Responsibility

After learning the case for and against social responsibilities, we can conclude that business is no longer a mere economic institution but it is also a social institution and businessmen are the trustees of different social groups.

The main reasons and factors which have forced businessmen to consider their responsibilities towards society

(i) Threat of public regulation
(ii) Pressure of labour movements
(iii) Impact of consumer consciousness
(iv) Development of social standard for business
(v) Relationship between social interest and business interest
(vi) Development of professional managerial Class

5. Kinds of Social Responsibilities

(i) Economic Responsibility

In an economic responsibility, business is expected to produce goods and services that are beneficial for society and society which wants and sell them at a profit.

(ii) Legal Responsibility

Every business enterprise is expected to operate within the legal frame work of our society. A law abiding enterprise gets no interference of government and is considered as a socially responsible enterprise.

(iii) Ethical Responsibilities

Ethics is much more than law, while behaving ethically businessmen should not be involved in adulteration, black marketing, etc.

(iv) Discretionary Responsibilities

This responsibility is purely voluntary. This includes contribution in charity. Participation in social service projects, setting up educational and training institutions etc helping people affected by flood, earthquake etc.

6. Social Responsibility towards Different Interest Groups

(i) Responsibilities towards Consumers

(a) Production of safe items by maintaining quality standards
(b) Being truthful in advertising
(c) To follow fair trade practices.

(ii) Responsibilities towards Employee

(a) Providing fair compensation and benefits
(b) Providing good and safe working conditions
(c) To give them opportunities to participate in decision making

(iii) Responsibilities towards the Owners / Shareholders / Investors

(a) To ensure safety of investment
(b) To ensure fair and regular return on investment
(c) To ensure appreciation of investment by proper utilisation of resources

(iv) Responsibilities towards the Government

(a) To abide by rules, regulations and laws
(b) To pay taxes and duties on time
(c) To help in solving social problem

(v) Responsibilities towards the Community

(a) To protect the environment from all types of pollution
(b) To provide more employment opportunities
(c) To help the weaker section of the society

(vi) Responsibilities towards Suppliers

(a) To ensure regular payment to the supplier
(b) To adopt fair dealing with the suppliers
(c) To protect and assist small scale suppliers by placing order with them

7. Business and Environment Protection

(i) Causes of Environmental Pollution

Environment pollution arises due to the following causes

(a) Air pollution
(b) Water pollution
(c) Land pollution

(ii) Need for Pollution Control

The main reasons to control the pollution are as follows

(a) To ensure safety
(b) Economic losses
(c) To maintain the natural beauty
(d) To ensure healthy life
(e) To lead a comfortable life

8. Role of Business in Environmental Protection

The businessmen should take following steps to control and check environmental pollution

(i) Making use of eco-friendly techniques of production
(ii) Recycling industrial waste
(iii) Treating the waste through technologies before discharging them into water or dumping in the land
(iv) Make use of eco-marks by producing eco-friendly products

9. Business Ethics It refers to the set of moral values or standards or norms which govern the activities of a businessman. Ethics defines what i, right and what IS wrong.

10. Elements of Business Ethics

Some of the basic elements of business ethics while running a business enterprises are

(i) Top management commitment
(ii) Publication of a ‘code’
(iii) Establishment of compliance mechanism
(iv) Involving employees at all levels
(v) Measuring result

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