1st PUC Business Studies Question Bank Chapter 6 Social Responsibilities of Business and Business Ethics

Karnataka 1st PUC Business Studies Question Bank Chapter 6 Social Responsibilities of Business and Business Ethics

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1st PUC Business Studies Social Responsibilities of Business and Business Ethics Textual Questions and Answers

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Multiple Choice Questions

Question 1.
Social responsibility is
a. Same as legal responsibility
b. Broader than legal responsibility
c. Narrower than legal responsibility
d. None of them
Answer:
b. Broader than legal responsibility

Question 2.
If business is to operate in a society which is full of diverse and complicated problems, it may have
a. Little chance of success
b. Great chance of success
c. Little chance of failure
d. No relation with success or failure.
Answer:
a. Little chance of success

Question 3.
Business people have the skills to solve
a. All social problems
b. Some social problems
c. No social problems
d. All economic problems
Answer:
b. Some social problems

Question 4.
That an enterprise must behave as a good citizen is an example of its responsibility towards
a. Owners
b. Workers
c. Consumers
d. Community
Answer:
d. Community

Question 5.
Environmental protection can best be done by the efforts of
a. Business people
b. Government
c. Scientists
d. all the people
Answer:
d. all the people

Question 6.
Carbon monoxide emitted by automobiles directly contributes to
a. Water pollution
b. Noise pollution
c. Land pollution
d. JV11 the people
Answer:
d. JV11 the people

Question 7.
Which of the following can explain the need for pollution control?
a. Cost savings
b. Reduced risk of liability
c. Reduction of health hazards
d. all of them
Answer:
d. all of them

Question 8.
Which of the following is capable of doing maximum good to society?
a. Business success
b. Laws and regulations
c. Ethics
d. Professional management
Answer:
c. Ethics

Question 9.
Ethics is important for
a. Top management
b. Middle-level managers
c. Non-managerial employees
d. Air pollution
Answer:
d. Air pollution

Question 10.
Which of the following alone can ensure effective ethics programme in a business enterprise?
a. Publication of a code
b. Involvement of employees
c. Establishment of compliance mechanisms
d. None of them
Answer:
b. Involvement of employees

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Short Answer Questions

Question 1.
What do you understand by social responsibility of business? How is it different from legal responsibility?
Answer:
Social responsibility of business refers to its obligation to perform those actions which are desirable in terms of the objectives and values of our society and benefit the community. Business cannot exist with the sole purpose of maximizing profits and has to undertake various activities for public good so as to maintain goodwill among people. Social responsibility is broader than legal responsibility of business. Legal responsibility may be fulfilled by mere compliance with the law but social responsibility includes voluntary obligations towards society not covered by law, along with the obligations laid down by law.

Question 2.
What is environment? What is environmental pollution?
Answer:
The environment is defined as the totality of man’s surroundings including both natural and man-made surroundings including natural resources like land, water, air, fauna and flora and raw materials; or man-made resources such as cultural heritage, socioeconomic institutions and the people. Environmental pollution refers to the injection of harmful substances into the environment which cause change in the physical, chemical and biological characteristics of air, land and water and can harm the life of human and other species.

Question 3.
What is business ethics? Mention the basic elements of business ethics.
Answer:
‘Ethics’ is k Greek word meaning character; norms, ideals or morals prevailing in a group or society. Business ethics refers to the relationship between business objectives, practices, techniques and the good of society. It is concerned with the, socially determined moral principles which should govern business activities.

The basic elements of business ethics are:

Top management commitment
Publication of a ‘Code’
Establishment of compliance mechanism
Involving employees at all levels
Measuring results

Question 4.
Briefly explain (a) Air pollution, (b) Water pollution and (c) Land pollution,
Answer:
(a) Air Pollution
Air pollution is caused by a combination of factors which lowers the air quality. It is mainly due to carbon monoxide emitted by automobiles, smoke and other chemicals from manufacturing plants which are released in the air. Air pollution has created a hole in the ozone layer leading to dangerous warming of the Earth.

(b) Water Pollution
Water pollution is caused by dumping of chemical, waste in water bodies like rivers, streams, etc. Water pollution has led to the death of several animals and posed a serious threat to human life.

(c) Land Pollution
Land pollution is caused by the dumping of toxic wastes on land which damages the quality of land making it unfits for agriculture or plantation.

Question 5.
What are the major areas of social responsibility of business?
Answer:
When the business commences, social objective of the firm is recognized and it is important for the organisation to know to whom and for what the business and its management are responsible. The major areas of social responsibilities of business include the following:

(i) Responsibility towards the Shareholders or Owners
A business enterprise has the responsibility to provide a fair return to the shareholders or owners on their capital investment and to ensure the safety of such investment.

(ii) Responsibility towards the Workers Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work and ensures a fair wage for their work.

(iii) Responsibility towards the Consumers
Supply of right quality and quantity of goods and services to consumers at reasonable prices constitutes the responsibility of an enterprise toward its customers.

(iv) Responsibility towards the Government and Community
An enterprise must respect the laws of the country and pay taxes regularly and honestly. It must behave as a good citizen and act according to the well accepted values of the society and protect the natural environment.

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Long Answer Questions

Question 1.
Build up arguments for and against social responsibilities.
Answer:
Arguments for Social Responsibility:

(i) Justification for Existence and Growth
The mission of every business is to provide goods and services to satisfy human wants. Profit should be viewed as an outcome of services to the people. Thus, practice of social responsibility by business provides justifications for its existence and growth.

(ii) Long-term Interest of the Firm
Social responsibility enhances the image and goodwill of the firm and results in maximum profits in the long run. If members of the society like workers, consumers, shareholders, and government officials are not convinced that the business enterprise is socially responsible, they will tend to withdraw their cooperation to the enterprise concerned.

(iii) Avoidance of Government Regulation
Government regulations limit the freedom of business. It is believed that businessmen can avoid the problem of government regulations by voluntarily assuming social responsibilities, which helps to reduce the need for new laws.

(iv) Maintenance of Society
Business enterprises should assume social responsibilities as the people who are dissatisfied with the business may resort to anti-social activities which may harm the interest of business itself.

(v) Availability of Resources with Business
Business institutions can help society to tackle its problems better as they have Valuable financial and human resources which can be effectively used for solving problems.

(vi) Converting Threats into Opportunities
Business enterprises can solve the social problems and can reap gains from them by accepting the challenge of converting risky situations into profitable deals.

(vii) Better Environment for Doing Business
Business may have little chance of success if it is to operate in a society full of diverse and complicated problems. Therefore, the business system should do something to solve the social problems to create a better environment conducive to its own survival.

(viii) Holding Business Responsible for Social Problems Some of the social problems like environmental pollution, unsafe workplaces, corruption in public institutions, and discriminatory practices in employment have either been perpetuated by business enterprises themselves. Therefore, it is the moral obligation of business to contribute in solving these problems.

Arguments Against Social Responsibility

(i) Violation of Profit Maximization Objective
According to this argument, business exists only for profit maximization and social responsibility is against this objective. Social responsibility of business is fulfilled if it maximizes profits through increased efficiency and reduced costs.

(ii) Burden on Consumers
It is argued that social responsibilities like pollution control and environmental protection involve huge costs which are likely to be shifted on to the consumers in the form of higher prices.

(iii) Lack of Social Skills
According to this argument, social problems should be solved by specialized agencies as businessmen do not have the necessary understanding and training to solve social problems.

(iv) Lack of Broad Public Support
According to this argument, the public in general does not like business involvement or interference in social programmes because of which business cannot operate successfully in solving social problems.

Question 2.
Discuss the forces which are responsible for increasing concern of business enterprises toward social responsibility.
Answer:
The following forces have been responsible for increasing concern of business enterprises towards social responsibility.

(i) Threat of Public Regulation
Threat of public regulation is one important reason due to which business enterprise feels concerned with social responsibility. Democratically elected governments have to take care of every section of the societies thus regulating the businesses behaving in a socially irresponsible manner.

(ii) Pressure of Labour Movement
Labour movement for ensuring fair gains for the working class throughout the world has become very powerful as labour has become far more educated and organized. ‘ This has forced business enterprises to pay due regard to the welfare of workers.

(iii) Impact of Consumerism
Development of education and mass media and increasing competition in the market have made the consumer aware of his rights and power which has forced business enterprises to follow a customer oriented approach.

(iv) Development of Social Standard for Business
New social standards consider economic activity of business enterprises as legitimate but with the condition that they must also serve social needs. Business functioning is to be ultimately judged on the basis of social standards.

(v) Development of Business Education
Educated persons as consumers, investors, employees, or owners have become more sensitive towards social issues with the development of business education with its rich content of social responsibility.

(vi) Relationship Between Social Interest and Business Interest Business enterprises have started realizing the fact that social interest and business interest are complementary to each other and that long-term benefit of business lies in serving the society well.”

(vii) Development of Professional, Managerial Class Previously business was managed by the owners but now professional management education in universities and specialized management institutes have created a separate class of professional managers who have a positive attitude towards social responsibility along with profit earning.

Question 3.
‘Business is essentially a social institution and not merely a profit making activity’. Explain.
Answer:
A business enterprise is permitted by society to carry on industrial or commercial activities and earn profits from it. Therefore, a business enterprise is expected to do business and earn money in ways that fulfill the expectations of the society. Like every individual living in society, business too has certain obligations towards society in terms of respect for social values and norms of behavior. It is obligatory on part of the business enterprise not to do anything that is undesirable from society’s point of view.

Manufacture and sale of adulterated goods, making deceptive advertisements, evading taxes, polluting the environment and exploiting workers are some examples of socially undesirable practices which may increase the profit of enterprises but which have adverse social effects. On the other hand, supplying good quality goods, creating healthy working conditions, honestly paying taxes, prevention of pollution and resolving customer complaints are examples of socially desirable practices which improve the image of enterprises leading tp higher profits in the long run.

The major areas of social responsibility of business which explain that business is essentially a social institution and not merely a profit making activity include the following:

(ii) Responsibility towards the Workers
Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work and ensures fair wage for their work.

(iv) Responsibility towards the Government and Community
An enterprise must respect the laws of the country arid pay taxes regularly and honestly. It must behave as a good citizen and act according to the well-accepted values of the – society and protect the natural environment.

Question 4.
Why do the enterprises need to adopt pollution control measures?
Answer:
Protection of the environment is a serious issue that confronts business managers and decision makers. Business enterprises need to adopt pollution control measures due to following reasons:

(i) Reduction of Health Hazards
Pollutants in the environment can cause many diseases like cancer, heart attacks and lung complications. Pollution control measures are needed to check the spread of such diseases for ensuring a healthy life on Earth.

(ii) Reduced Risk of Liability
If an enterprise is held liable for causing damage to people by the toxicity of gaseous, liquid and solid wastes it has released into the environment, it may be required to pay compensation to the affected people. This risk of liability can be reduced by installing pollution control devices in its premises.

(iii) Cost Savings
Improper production technology results in greater wastes which leads to higher cost of waste disposal and cost of cleaning the plants. An effective pollution control programme can thus save operating costs of business.

(iv) Improved Public Image
Society today is conscious of environmental quality and hence a firm’s policies and practices for controlling wastes influence people’s attitude towards its working. A firm that adopts pollution control measures will be perceived as a socially responsible enterprise.

(v) Other Social Benefits
Pollution control results in many other benefits like clearer visibility, cleaner buildings, better quality of life, and the availability of natural products in a purer form.

(vi) Legal Obligations
There are certain laws in place to control pollution with which the business enterprises also have to comply so as to control pollution which causes risks with environment quality. Human health and damage to natural and man-made resources.

Question 5.
What steps can an enterprise take to protect the environment from the dangers Of pollution?
Answer:
Some of the specific steps which can be taken by business enterprises to protect the environment from the dangers of pollution are as follows:

(i) Top Management Commitment
The first and the foremost step is to have a definite commitment by top management of the enterprise to create, maintain and develop work culture for environmental protection.

(ii) Involving Employees at All Levels
Second step is to commitment to environmental protection is shared throughout the enterprise by all divisions and employees as they will actually implement the environment protection programmes and policies.

(iii) Laying Down Policies for Environment Protection Another important step is to develop clear-cut policies and programmes for purchasing good quality raw materials, employing superior technology, using scientific techniques of disposal and treatments of wastes and developing employee skills for the purpose of pollution control.

(iv) Legal Compliance
A very important and essential step is to comply with the laws and regulations enacted by the Government for prevention of pollution.

(v) Voluntary Participation
Participation in government programmes relating to management of hazardous substances, clearing up of polluted rivers, plantation of trees and checking deforestation is also an important step in environmental protection by business enterprises.

(vi) Measuring Results
Periodical assessment of pollution control programmes in terms of costs and benefits is also essential in order to have a steady progress with respect to environmental protection.

(vii) Education and Training
Another step that can be taken for environmental protection is arranging educational workshops and training materials to share technical information and experience with suppliers, dealers and customers to get them actively involved in pollution control programmes.

Question 6.
Explain the various elements of business ethics.
Answer:
The various elements of business ethics are as under:

(i) Top Management Commitment
The Chief Executive Officer (or CEO) and other higher level managers need to be openly and strongly committed to ethical conduct as top management has a crucial role in guiding the entire organization towards ethical behavior.

(ii) Publication of a ‘Code’
The principles of conduct for the organization in the form of written documents are „ referred to as the “code”. It generally covers areas such as fundamental honesty and adherence to laws; product safety and quality; health and safety in the workplace; conflicts of interest; fairness in selling/marketing practices; and financial reporting.

(iii) Establishment of Compliance Mechanisms
Suitable compliance mechanisms should be established to ensure that actual decisions and actions comply with the firm’s ethical standards. Some examples of such mechanisms are: considering values and ethics in recruiting and hiring; emphasizing corporate ethics in training; auditing performance regularly to analyze the degree of compliance; and instituting communication systems , to help employees report incidents of unethical behavior.

(iv) Involving Employees at All Levels
Involvement of employees at all levels in ethics programmes is essential as it is the employees who implement ethics policies to make ethical business a reality Thus, small groups of employees can be formed to discuss the important ethics policies of firms and examine attitudes of employees towards these policies.

(v) Measuring Results
The firms must audit to monitor compliance with ethical standards to measure the end results of ethics programmes as far as possible and further course of action should then be decided by the top management team in discussion with other employees.

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Additional Questions And Answers

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Multiple Choice Questions

Question 1.
What is the classical view of management’s social responsibility?
a. To create specific environment in work place
b. To maximise profits
c. To protect and improve society’s welfare
d. All of the above
Answer:
b. To maximise profits

Question 2.
What does the socio – economic view of social responsibility talk about?
a. Social responsibility goes beyond making profits to include protecting and improving society’s welfare
b. Encourage business
c. Financial return
d. None of the above
Answer:
a. Social responsibility goes beyond making profits to include protecting and improving society’s welfare

Question 3.
Who was the most outspoken advocate of the classical view of management’s responsibility?
a. Wieck and Adams
b. Jacques and Patchen
c. Milton Friedman
d. None of the above
Answer:
c. Milton Friedman

Question 4.
What is the only concern of stock holders?
a. Financial return
b. Make profits
c. Encourage business to take up social responsibility
d. None of the above
Answer:
a. Financial return

Question 5.
Which of the following is a disadvantage of social responsibility?
a. Possession of resources
b. Ethical obligation
c. Public image
d. Violation of profit maximisation
Answer:
d. Violation of profit maximisation

Question 6.
is when a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities.
a. Social obligation
b. Social responsibility
c. Social responsiveness
d. None of the above
Answer:
a. Social obligation

Question 7.
When social criteria is applied on investment decisions it is called
a. Social responsiveness
b. Ethical obligation
c. Social screening
d. Financial return
Answer:
c. Social screening

Question 8.
The recognition of the close link between an organisation’s decisions and activities and its impact on the natural environment is called
a. Global environment
b. Greening of management
c. Social actions
d. None of the above
Answer:
b. Greening of management

Question 9.
Which of these is called a light green approach?
a. Market approach
b. Activist
c. Stakeholder approach
d. Legal
Answer:
d. Legal

Question 10.
State true or false.
i. Activist approach is also called as the dark green approach.
a. True
b. False
Answer:
a. True

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Short Answer Questions

Question 1.
What do you understand by social responsibility of business?
Answer:
The concept of social responsibility of business is based on the idea that a business functions in the society and uses the physical and human resources of the society for its day to day functioning, and so, it is obliged to serve the society.

Question 2.
What is environment?
Answer:
It is the surroundings of Air, water and land, human, forest, sky, etc.

Question 3.
What is business ethics?
Answer:
In the words of W.O. Wheeler, “Business ethics is an art or science of maintaining a proper harmonious relationship with society and various groups and institutions as well as recognising the moral responsibility for the rightness or wrongness of business conduct”.

Question 4.
State the major areas of social responsibilities of business.
Answer:
The major areas of social responsibilities of business are:

Shareholders: Shareholders or investors are the owners of the business. So, every business has certain responsibilities or obligations to the shareholder or owners.
Consumers: Customers’ satisfaction is very essential for the success for the ‘success of any business. So, customers’ satisfaction should be one of the main aims of every business.

Question 5.
State the basic elements of business ethics.
Answer:
The main elements of business ethics of a business enterprise are:

Code of Ethics
Suitable Compliance Mechanism
Employee involvement.
Regular Monitoring
Top Management Support.

Question 6.
Mention the responsibilities of business towards shareholders.
Answer:
The responsibilities of business towards shareholders are:

It must ensure the effective utilisation of the funds provided by the shareholders or owners.
It must encourage the shareholders to take an active interest in the working and management of the company.
It must see that the public image of the company is such that the shareholders feel proud of their company.

1st PUC Business Studies Social Responsibilities of Business and Business Ethics Long Answer Questions

Question 1.
Explain the social responsibilities of business towards consumers and employees.
Answer:
Responsibilities of business to the Consumers:
Customers’ satisfaction is very essential for the success for the success of any business. So, customers’ satisfaction should be one of the main aims of every business.

It must provide to the consumers better qualify goods at fair or reasonable prices.
It must ensure regular, adequate and uninterrupted supply of goods to the customers.
It must provide proper after-sales services to customers.

Responsibilities of business to the Employees:
Work force is an essential element for the success for any business. So, every business has certain responsibilities or obligations to its employees or workers. Those responsibilities are:

It must ensure fair and courteous treatment to the workers.
It must establish fair work standards, and norms.
It must provide proper labour welfare facilities to the workers.

Question 2.
Explain the arguments for and against social responsibilities of business.
Answer:
Arguments for social responsibility are:

1. Long-term interest of the firm: A firm and its image stand to gain maximum profits in the long run when it has its highest goal as ‘service to society’.

2. Converting problems into opportunities: Related with the preceding argument is the argument that business with its glorious history of converting risky situations into profitable deals can not only solve social problems but it can also make them effective effectively useful by accepting the challenge.

3. Justification for existence and growth: Business exists for providing goods and services to satisfy human needs.

4. Avoidance of Government Regulations: Form the point of view of a business, government regulation are undesirable because they limit freedom.

5. Favorable environment for business: To have a favorable atmosphere for the business to flourish, it is essential for every business to be socially respondent.

6. Maintenances of society: It is noticed that many government organizations and social organizations have failed in improving the conditions of the society.

7. Consumerism: The movement of consumerism also influences the business concerns to undertake social responsibilities.

8. Availability of resources with business: The business concern has more resources in terms of labour, capital and materials etc.

Arguments against the social responsibility of business:

1. Lack of social skills: All social problems cannot be solved the way business problems are solved. In fact, businessmen do not have the necessary understanding and training to solve, social problems.

2. Lack of broad public support: Here the argument is that the public in general does not like business involvement or interference in social programmes.

3. Burden on customers: If business undertaking accepts the social responsibility. They are very costly and often require huge financial investments. In such circumstances businessmen are likely to simply shift this burden of social responsibility.

4. Government duty: Undertaking of social welfare schemes is the duty of government, but not of business. So business need not accept the social responsibility

5. Violation of profit maximization objectives: According to this argument the main – object of business is earning profit. Business exists only for profit maximization. But and talk of social responsibility is against this objectives. In fact business can best fulfill its social responsibility.

6. Conflict: The main aims of business is maximizing profit and social responsibility of business aims at providing services to society. Therefore there will be conflicts between profit motive and service motive of business concerns.

Question 3.
Explain the social obligations of business towards environmental protection.
Answer:
Control of Environmental Pollution and protection of Environment:
The Above adverse effects of environmental pollution suggest the need for control of – environmental pollution and the importance of environmental protection.

Several steps have to be taken by the Government, the people and business firms for the control of environmental protection. The business firms have an important social responsibility to promote and enforce environmental protection.

The role of business in environmental protection can be as follows:

The top management of business houses should be committed to the cause of environmental protection. This would motivate their staff to engage in activities aimed at environmental protection.
The business enterprises should contribute generously towards the environmental protection programs initiated by Governmental and non-governmental organisations.
They should assess the progress of environmental protection programmes introduced by them in their own firms.
They should also educate the people about the need for their active involvement in the protection of environment.
The business firms should strictly follow the laws and regulations enacted by the Government for protecting the environment.
The business firms should actively participate in environmental protection programmes such as clearing the polluted rivers, planting of trees, etc.

The business firms should develop and maintain environmental protection workplace.

The business firms should initiate policies and programmes for proper discharge of industrial wastes.
The business houses should explain to their workforce the importance of environmental protection not only in workplace and homes, but also in public places, through regular workshops.