Gujarat Board GSEB Class 11 Organization of Commerce and Management Important Questions Chapter 11 Social Responsibility of Business Important Questions and Answers.

GSEB Class 11 Organization of Commerce and Management Important Questions Chapter 11 Social Responsibility of Business

Short Answer Type Questions

Question 1.
Give the concept of pro-company given by H. R. Boven.
Answer:
H. R. Boven in his research paper gave the concept of pro-company in 1963 in America. As per Boven a company that favours social responsibility is called a pro-company.

Question 2.
Explain the concept of pro-company social responsibility given by World Business Council.
Answer:
As per World Business Council for sustainable development a pro-company social responsibility refers to a company that works for the financial development of the company, works for improving quality and standard of living of people and show ethical commitment towards the community of the society.

Question 3.
How is social responsibility now enforced through Companies Act, 2013?
Answer:
As per article 135 of Companies Act 2013; companies having yearly turnover of more than Rs. 1000 crore and having a net value more than Rs. 500 crore OR having more than Rs. 5 crore profit in the previous financial year will have to mandatorily perform its social responsibility. Such company will have to spend at least 2% of average profit of previous 3 years or of current financial year for activities related to social responsibilities.

Question 4.
What if a company is unable to spend the amount enforeced through companies Act, 2013 on social responsibility?
Answer:
If The company is unable to do so it will have to provide a valid reason and financial report for company’s inability to spend.

Question 5.
Into how many levels can we divide social responsibilities? Name them.
Answer:
(A) Financial (economic) responsibility,
(B) Legal responsibility,
(C) Ethical responsibility,
(D) Responsibility as per choice (Philanthropic responsibility)

Question 6.
Explain financial responsibility as a level of social responsibility for a business
Answer:
A company’s first responsibility is economic , responsibility. This means a company primarily needs to earn profit. The reason behind earning profit as primary reason is that if the company does not make profit, it won’t last, its employees will lose jobs and so company won’t be even able to think of social responsibility.

Question 7.
Explain legal responsibility as a level of social responsibility for a business.
Answer:
A company’s legal responsibilities are the requirements that a company need to fulfill as per law. A company needs to follow all the laws put on it. Legal responsibilities includes following labour laws, environmental law, etc.

Question 8.
Explain ethical responsibility as a level of social responsibility for a business
Answer:
Ethical responsibilities are responsibilities that , a company needs to fulfill because its owners believes it’s the right thing to do and not that it has to do it forcefully.

Question 9.
Explain philanthropic responsibility i.e. responsibilities by choice.
Answer:
These responsibilities focus on making an effort to benefit the srociety. For example, doing some donations for opening a public school, hospital, etc. setting-up a public park or orphanage, etc.

Question 10.
What do you mean by stake-holders or stake-holding groups?
Answer:
A stake-holder is a person having an interest or concern in business. A variety of groups having different interest are associated with the business directly or indirectly. Each group is called a stake-holding group.

Question 11.
How many types of stake-holding groups are there? Name them.
Answer:
Two; internal stake-holding groups and External stake holding groups.

Question 12.
What do you mean by internal stake-holding groups?
Answer:
The interest groups which are associated directly with the management of a business unit and which forms a part of business unit are called internal stake holders or internal stake holding groups.

Question 13.
State the stake-holders in internal stake-holding group.
Answer:

• Owners
• Investors and
• Employees of company.

Question 14.
What do you mean by external stake holding groups?
Answer:
The interest groups which are indirectly associated with the management of a business unit are called external stake holding groups

Question 15.
State the stake-holders in external stake-holding group.
Answer:

• Customers
• Suppliers
• Government and
• Society.

Question 16.
Into how many types of responsibilities can we divide responsibilities of business towards internal stake-holding groups? Name them.
Answer:
Three;

1. Social responsibility towards owners
2. Social responsibility towards investors and
3. Social responsibilities towards employees.

Question 17.
Explain providing capital security and growth as a social responsibility of business.
Answer:
Company’s managers need to put their personal interest aside and use their skills and experience for providing security to the capital that the share-holders have invested and give them good returns through company’s growth.

Question 18.
Explain providing necessary information to investors as a social responsibility of business.
Answer:
It is the responsibility of the business unit to inform its current position and future plans to the investors.

Question 19.
How does a company fulfill its social responsibility of providing security of money to investors?
Answer:
Investors invest their money in the business unit believing that the company will work efficiently and deliver good returns. It is the social responsibility of the business to make proper use of investor’s money so that it remains safe and grows. This will also help company to borrow more money from investors in future.

Question 20.
Explain maintaining standard of living of employees as a social responsibility towards employees
Answer:
Remuneration i.e. salary/wages an employee earns reflects his standard of living. Based on . company’s financial status it must provide a reasonable remuneration to the employees which can maintain their standard of living. For this the business over and above remuneration, need to provide incentives, bonus, etc. at pre-decided intervals.

Question 21.
How can a business provide proper work atmosphere and facilities and fulfill its social responsibility?
Answer:
The business unit must provide positive work atmosphere that encourages growth of peer relationship and Strong bonding towards company. Based on unit’s size it can provide canteen, transportation, clean and well ventilated environment, etc. to the employees. If possible a business unit should provide air¬conditioning and separate arrangements for female employees.

Question 22.
What is employee (labour) union?
Answer:
A labour or employee union is an organization established by the employees with an aim of representing collective interests and problems of employees to the management and obtain solutions.

Question 23.
How should be the approach of management towards employee union?
Answer:
Management should give recognition to employee union. It should have a compromising and flexible approach for paying attention to the problems raised by union. Management should try to solve reasonable demands of the union.

Question 24.
What does maintaining a compromising attitude by top management means?
Answer:
It means that the top management should not remain very rigid in its policies and decisions. The management should listen to the reasonable demands of employees and be flexible enough to fulfill them.

Question 25.
Explain selling goods and services properly as a social responsibility of business towards customers.
Answer:
It is the social responsibility of a business to maintain the said quality and quantity of goods and services it provides to customers. It should see that it provides proper packing and delivery, does not tamper weight or does not provide adulterated goods/services.

Question 26.
Why should a company not misled its customers through inappropriate advertisements?
Answer:
By releasing inappropriate or obscene advertisements company fools, cheats and misguides the customers. It hurts their
sentiments and moral values too. Hence

Question 27.
Explain social responsibility of business towards suppliers.
Answer:
Suppliers supply raw materials, finished products and/or services to business on a constant and consistent basis. The business then sells them in market and earns profit. Hence, a businessman should fulfill social responsibilities towards its suppliers.

Question 28.
Why it is important to keep the suppliers well informed about material needed by business?
Answer:
A business unit should inform its suppliers well in advance about the products/services it will require. Doing so will help the business to obtain a constant supply which can then be used to process and put in market on time and in continuity. This also improves credit of business in the market in the sense that it supplies products to customers whenever they need.

Question 29.
Why should a business participate in government’s programmes as a part of social responsibility? Explain with an example.
Answer:
Government arranges various programmes for the welfare of the nation. A business unit should involve in such programmes to support the government’s vision. For example, business unit should participate and support programmes like Swachh Bharat Abhiyan, Make in India, etc. to strengthen our nation and enhance its growth.

Question 30.
Why should a business participate in government’s plans for implementing industrial policies?
Answer:
Government establishes and modifies its industrial policies as per the need of the here. It is the social responsibility of the business unit to participate in successful implementation of such policies.

Question 31.
State few social responsibilities of business towards society.
Answer:

• Preserve environment,
• Contribute in national development works,
• Give importance to research, etc.

Question 32.
Why giving importance to research fails under social responsibility of business towards society?
Answer:
A company needs to give importance to research. It needs to invest a part of its profit in research and development. By doing so it will be able to improve its product quality, improve its business processes and productivity. Through research company will be then able to roll out better products at fair prices and give their benefit to a vast section of society. Hence,

Question 33.
How can a company maintain social and cultural legacy of country and fulfill its social responsibility?
Answer:
Business units should neither produce goods/ services nor follow policies and practices that harms the social and cultural legacy of the nation. It should not use such advertisements which harms this legacy. For example, company’s advertisements should not portray vulgarity, sexual discrimination, etc.

Question 34.
Which environmental sectors does a business need to serve as a part of its social responsibility?
Answer:

• Land and forest preservation
• Preservation of water resources
• Preservation of atmosphere and
• Preventing noise pollution.

Question 35.
How can a unit preserve land and forest as a part of its social responsibility?
Answer:
A business unit requires land to do business. If it has to cut trees from that land to use it for business than it should plant an equal or proportionate number of trees to balance the environmental loss. If the unit is disposing its waste such as chemicals, polluted water, etc. in surrounding area then it should be first well treated before disposal.

Question 36.
What care should units take to prevent atmospheric pollution?
Answer:
The unit before releasing the pollutants should treat them well so that they do not harm the atmosphere. Smoke, fumes and harmful chemicals coming out of industries can deteriorate atmosphere and air equality.

Question 37.
State any two elements of business ethics.
Answer:

1. Commitment of higher management,
2. Publishing directional rules,
3. Establishing structure to follow business ethics, etc.

Question 38.
Why role of top management is very important to establish business ethics?
Answer:
Role of top or higher management is extremely important for the business unit to follow business ethics.Their approach and leadership towards business ethics can motivate and drive all the employees of the organization to fall in line and follow the ethics maintained by the organization.

Question 39.
Why it is important to publish and print established ethics and rules in the company?
Answer:
The company can print the ethics and rules and put them at several important locations of the company. Whenever, the employees pass through such locations, they can refer these prints and always remember the ethics as well as rules established by the company.

Question 40.
State the full form of WBCSD.
Answer:
World Business Council for Sustainable Development (WBCSD)

Long Answer Type Questions

Question 1.
Describe the importance of social responsibilities of business.
OR
Give a brief idea about the concept and need of social responsibility of business.
Answer:
Social responsibility:

• Humans live in society and do business. So, business is an undivided unit of the society. Various areas of society contribute for the establishment, existence and expansion of business. Without the existence of society or support of society one cannot think of business.
• For example, when we do a business we need a class of people who can produce or provide us raw material, we need people who can trust us and invest in our business or provide us credit, we need employees who can help us achieve our business goals, we need cleaning and maintenance staff who can keep our business premises clean.
• We also need a strong support from government to provide us infrastructure such as road, transportation, electricity, etc.
• We also need government’s support to gives us a platform to work and to provide us a legal system to resolve business problems.
• Without all these supports it is impossible that one can ever think of establishing a business.
• As a human being it then becomes our social responsibility as well the ^ responsibility of our business to thank and pay back the assistance we get from ’ all these sections of the society. Though not compulsory to do so but every individual must do this voluntarily to make this society a better place to live and help the future generations.
• With this approach, H. R. Boven in year 1963 gave the concept of pro-company in his research paper in America. Since then the concept of pro-company has become rampant. The prefix ‘pro’ refers to ‘in favour of So pro-company social responsibility can be thought as a company that favours social responsibility.
• As per World Business Council for sustainable development a pro-company social responsibility refers to a company that works for the financial development of the company, works for improving quality and standard of living of employees and their families and show ethical commitment towards the community of the society.

Question 2.
How as per Companies Act, 2013, social responsibility is now enforced?
Answer:

• Actually, social responsibility is optional. However, business units did not adhere to it. So, in 2013, government through the Companies Act, 2013 enforced social responsibility to be fulfilled by company for some sections of society.
• As per article 135 of Companies Act, 2013, from 1st April, 2014, companies having yearly turnover of more than ₹ 1000 crore and having a net value more than ₹ 500 crore OR having more than ₹ 5 crore profit in the previous financial year will have to mandatorily perform its social responsibility. Such company will have to spend at least 2% of average profit of previous 3 years or of current financial year for activities related to social responsibilities.
• If the company is unable to do so it will have to avoid a valid reason and financial report for company’s inability to spend.
• The Companies Act, 2013 has recommended the companies and large business houses to form a ‘Social responsibility committee’ of at least 3 members in their office who would look after the ways to invest company’s money in fulfilling the task of social responsibility. Moreover, the ministry of Law has emphasized companies to become socially responsible company for a better tomorrow.

Question 3.
Define social responsibility. State the various levels of responsibilities a company has.
Answer:
Social responsibilities:
The services and contribution that a business receives from the society right from its establishment to its expansion can be considered as society’s obligation to business. The responsibility of the business to perform such social duties which can return these obligations to the society is called social responsibility of the business.

Question 4.
Explain the four levels of business responsibilities.
Answer:
The responsibilities of a business which it needs to fulfill can be divided in four levels. They are:

1. Financial (economic) responsibility
2. Legal responsibility
3. Ethical responsibility
4. Responsibility as per choice (Philanthropic responsibility)

Levels of social responsibilities
1. Financial responsibility:
A company’s first responsibility is economic responsibility. This means a company primarily needs to earn profit.
The reason behind earning profit is primary reason is that if the company does not make profit, it won’t last, its employees will lose jobs and so company won’t be even able to think of social responsibility.

2. Legal responsibilities:
A company’s legal responsibilities are the requirements that a company need to fulfill as per the law. A company needs to follow ali the laws put on it. Legal responsibilities includes following labour laws, environmental law, etc.

3. Ethical responsibilities:

• After a company has fulfilled the two big responsibilities i.e. economic and legal, a company can think of ethical responsibilities.
• Ethical responsibilities are responsibilities that a company needs to fulfill because its owners believes it’s the right thing to do and not that they have to do it forcefully. Ethical responsibilities could include being environment friendly, paying fair wages, participating in government programmes, etc.

4. Responsibilities by choice (Philanthropic responsibilities):

• Once the company meets all its other responsibilities it can focus on fulfilling philanthropic responsibilities i.e. responsibilities by choice.
• These responsibilities focus on making an effort to benefit the society. For example, doing some donations for opening a public school, hospital, etc., setting-up a public park or orphanage, etc.

Question 5.
What do you mean by stake holders in business? Define the types of stake holders and list them.
Answer:
Stake holders:
A stake-holder is a person having an interest or concern in business.

Explanation:
A business is considered an independent activity that makes profit by producing and/or trading. Though a business is termed and considered independent it cannot function without contribution of various people from various sections of society. A variety of groups having different interest are associated with the business directly or indirectly. Each group is called a stake-holding group.

There are two types of stake-holders or stake-holding groups. They are:
(A) Internal stake-holding groups:
The interest groups which are associated directly with the management of a business unit and which forms a part of business unit are called internal stake holders or internal stake holding groups.

This group consists of:

• Owners
• Investor and
• Employees of company.

(B) External stake-holding groups:
The interest groups which are indirectly associated with the management of a business unit are called external stake holding groups.

These groups consists of:

• Customers
• Suppliers
• Government and
• Society.

Question 6.
Explain ethical responsibility of business.
Answer:
Ethical responsibilities:

• After a company has fulfilled the two big responsibilities i.e. economic and legal, a company can think of ethical responsibilities.
• Ethical responsibilities are responsibilities that a company needs to fulfill because its owners believes it’s the right thing to do and not that they have to do it forcefully. Ethical responsibilities could include being environment friendly, paying fair wages, participating in government programmes, etc.

Question 7.
What are business responsibilities by choice or philanthropic responsibilities.
Answer:

• Once the company meets all its other responsibilities it can focus on fulfilling philanthropic responsibilities i.e. responsibilities by choice.
• These responsibilities focus on making an effort to benefit the society. For example, doing some donations for opening a public school, hospital, etc., setting-up a public park or orphanage, etc.

Question 8.
Describe social responsibilities of business towards investors.
Answer:
Social responsibility of a business towards investors.
When a company needs additional capital it raises it from investors. These investors could be banks, preference or debenture share-holders, etc. social responsibilities towards these investors are as follows:
1. Timely payment of good returns:
Investors invest with an expectation of high returns at regular interval or a present time. Thus it is the social responsibility of the business unit to pay good returns to investors regularly.

2. Provide necessary information:
It is the responsibility of the business unit to inform its current position and future plans to the investors.’

3. Provide growth to the invested value:
Better the financial results of the unit better will be the market value of the funds invested in the company. So, a unit should take such decisions which gives growth to the investment of investors.

4. Security of money:
Investors invest their money in the business unit believing that the company will work efficiently and deliver good returns. It is the social responsibility of the business to make proper use of investor’s money so that it remains safe and grows. This will also help company to borrow more money from investors in future.

5. Welcome suggestions:
Generally, the investors who invest their money are aware of the market trends. So, the business units should welcome the suggestions of investors and try and use them for betterment of the company.

Question 9.
Describe social responsibilities of business towards employees.
Answer:
Social responsibility of business towards employees.
Employees form the base of any business unit. Without their whole hearted contribution a business unit cannot work with its full efficiency. Thus, it is the social responsibility of a business unit to take proper care of its employees. This includes:
1. Maintaining standard of living :
Remuneration i.e. salary/wages an employee earns reflects his standard of living. -» Based on company’s financial status it must provide a reasonable remuneration to the employees which can maintain their standard of living. For this the business over and above remuneration, need to provide incentives, bonus, etc. at pre¬decided intervals.

2. Provide proper work atmosphere and facilities:

• The business unit must provide positive work atmosphere that encourages growth of peer relationship and strong bonding towards company.
• Based on unit’s size it can provide canteen, transportation, clean and well ventilated environment, etc. to the employees.
• If possible a business unit should provide air-conditioning and separate arrangements for female employees.

3. Provide social security:
In addition to timely and reasonable salary, employees should be provided facilities like provident fund, pension, sick and casual leaves, medical and life insurance, etc.

4. Give recognition to employees (labour) union:
Employees form employee (labour) union to present their problems and demands in an organized way to the management. The management must provide recognition to such union. It should listen to union’s reasonable demands and fulfill them for maintaining motivation and moral of the employees.

5. Maintaining a compromising attitude by top management:

• Top management should have a flexible and compromising attitude for the betterment of the business unit.
• It should keep in mind that employees are an asset and they will work efficiently and remain motivated only if their reasonable demands are fulfilled and their genuine complains are solved.
• By maintaining a compromising attitude the business can let go its few incorrect or egoistic decisions or policies and compromise them for employees and business growth.
• A warm and cordial relation should be maintained with employees so that family like healthy atmosphere can be maintained in the company.

6. Motivation:
A business unit must create several opportunities through which it can constantly motivate its employees.
-> A unit can arrange competitions for best performance, arrange tours or dinners with employees, award them for their specific contribution in enhancing business, etc. The business unit also encourages its employees through increments, promotions, rewards, cash vouchers, travel vouchers, etc.

7. Other responsibilities:
Business unit should involve employees in decision making, inform them about company’s important decisions and plans, terms and conditions of work before appointing them, etc.
The unit should also care for education and health of employee’s family, etc.

Question 10.
Write short note on following.
Answer:
(I) Social responsibilities of business towards customers.
Existence of business is impossible without customers form the axis of business. They are called the king of market.

Business needs to fulfill following responsibilities towards its customers:
1. Selling goods and services properly:
It is the social responsibility of a business to maintain the said quality and quantity of goods and services it provides to customers. It should see that it provides proper packing and delivery, does not tamper weight or does not provide adulterated goods/services.

2. Reasonable profit:
In today’s competitive environment, the business unit should focus on earning a reasonable profit rather than overcharging and exDloiting the customers. A business should satisfy its customess by maintaining reasonable margins.

3. Maintaining continuity of supply in the market:
A business unit should supply its products on a regular basis in the market. It should not hoard and create artificial scarcity.

4. Should not issue misleading advertisements:

• Some units exaggerate their products and services through advertisements. When in reality the products might not be that worthy.
• Customers get lured by these misleading advertisements. When they buy they realize they have been cheated. A business unit should not issue such advertisements to mislead and cheat its customers.
• A business should also not release obscene advertisements.

5. After sales service:

• The real test of a product or service starts not when it is produced and sold but after it is sold.
• It is the social responsibility of the business to provide proper after sales service to the customers. Business unit must make proper provision for grievance redressal of customer for faulty or damaged products. It should provide facility for repair, return and refund.
• It is a customer’s social as well as legal right to obtain solutions for his products and services.

(II) Social responsibilities of business towards suppliers.
Suppliers supply raw materials, finished products and/or services to business on a constant and consistent basis. The business then sells them in market and earns profit. Hence, a businessman should fulfill following social responsibilities towards its suppliers.
1. Inform the suppliers well in advance:
A business unit should inform its suppliers well in advance about the products/ services it will require. Doing so will help the business to obtain a constant supply of material which can then be used to process and put products in market on time and in continuity. This also improves credit of business in the market in the sense that it supplies products to customers whenever they need.

2. Clarify the quality and quantity specifications:
The unit should clearly mention the quality and quantity requirements in advance to avoid any misunderstandings later. This will save time and effort of supplier as well as business and also not affect the production cycle.

3. On time payment:
The business unit should make timely payment to its suppliers as per mutually agreed terms and conditions.

(III) Social responsibilities of business towards government.
1. Obey laws:
It is the social as well as legal responsibility of the business to obey the laws established by government.

2. Pay taxes honestly:
The business unit should pay all its taxes honestly and on time.

3. Participate in government programmes:
Government arranges various programmes for the welfare of the nation. A business unit should involve in such programmes to support the government’s vision. For example, business unit should participate and support programmes like Swachh Bharat Abhiyan, Make in India, etc. to strengthen our nation and enhance its growth.

4. Participate in the implementation of industrial policy:
Government establishes and modifies its industrial policies as per the need of the , hour. It is the social responsibility of the business unit to participate in successful implementation of such policies.

(IV) Social responsibilities of business towards society.
As per management consultant Mr. Peter F. Drucker, a business should be managed in such a way that balance can be maintained between interest of business units and various communities/sections of the society. The business unit must maintain economic and social interests of the society. It should fulfill the following responsibilities towards society:
1. Preserve environment:
The business unit should conduct production and other processes in such a manner that it causes least pollution and hence environment remains preserved.

2. Contribution in national development works:

• When every business unit focuses on growth and development it will lead to national development and prosperity.
• The unit needs to make best use of its financial and other resources to enhance its productivity and hence support national development.

3. Give importance to research:
A company needs to give importance to research. It needs to invest a part of its profit in research and development. By doing so it will be able to improve its product quality, improve its business processes and productivity. Through research company will be then able to roll out better products at fair prices and give their benefit to a vast section of society. This will also help the company to maintain its position in strong’competition.

4. Remain helpful during natural calamities:
In times of calamites the business units must help government to raise food-packets, medical facilities etc. for the victims.

5. Conserve social and cultural heritage of country:
Business units should neither produce goods/services nor follow policies and practices that harms the social and cultural legacy of the nation. It should not use such advertisements which harms this legacy. For example, company’s advertisements should not portray vulgarity, sexual discrimination, etc.

6. Participate in social encouragement:
Business units should try to create equality in society. It should try to provide equal opportunity to all the sections of society. It should also focus on raising opportunities for badkward and downtrodden sections of society.

7. Create employment opportunities:
A unit should grow and raise employment. By doing so, it will help the country to achieve national equality and increase national growth ratio.

8. Maintain human rights:
Business unit should follow national and constitutional rights so as to maintain human rights in the society.

Question 11.
It is the responsibility of business to maintain standard of living of its employees. Give reason.
Answer:
Remuneration i.e. salary/wages an employee earns reflects his standard of living. Based on company’s financial status it must provide a reasonable remuneration to the employees which can maintain their standard of living. For this the business over and above remuneration, need to provide incentives, bonus, etc. at pre-decided intervals.

By maintaining standard of living of its employees business can expect better efficiency and high morale from them at work place.

Question 12.
Companies should not issue misleading advertisements. Give reason.
Answer:

• Some units exaggerate their products and services through advertisements when in reality the products might not be that worthy.
• Customers get lured by these misleading advertisements when they buy they realize they have been cheated. A business unit should not issue such advertisements to mislead and cheat its customers.
• A business should also not release obscene advertisements.
• Luring customers by false claims through such advertisements is not only inappropriate but also ethically wrong.

Question 13.
Business units by following their social responsibilities towards government can fulfill country’s vision of growth and prosperity. Give reason.
Answer:

• Every government plans for the prosperity of the nation. To achieve this it lays various plans, policies and laws. It also provides numerous facilities like raising infrastructure, providing health and educational facilities, platform for trade, etc.
• No business can ever work without the facilities and support of the government. So, it becomes foremost duty of the business to pay its taxes, obey laws and participate in government’s plans and vision.
• If a business fulfills its social responsibility towards government it well help prosper the nation which in turn will help in the growth of business.
• Hence, business units by following their social responsibilities towards government can fulfill country’s vision of growth and prosperity.

Question 14.
What do you mean by business ethics? Explain in detail.
Answer:
Business ethics:

• A set of accepted principles and standards that guides how a business should behave and operate is called business ethics.
• Based on discussions, established facts, input from academicians, industry experts, etc. the principles and standards for business facts are established.
• Business ethics define what is right and what is wrong, how individuals of the unit should be treated. For example, standards that say that a unit should bot indulge in fraud, bribery, etc.
• Note that business ethics are quite different from legal regulations. Business ethics cannot be enforced whereas legal regulations can be. If business units follow business ethics whole heartedly and with discipline it is quite possible that there might be no need to enforce the ethics by law. Society also expects that businesses run ethically so that social set-up does not get disturbed.
• Mostly business units violate ethics when they aim at speedy, undue and high profits.
• It has been observed that units who follow business ethics properly survive longer and also achieve good economic returns.

Question 15.
State and explain the elements of business ethics.
Answer:
Elements of business ethics:
To follow business ethics, a unit need to adhere to following elements of business ethics.
1. Commitment of higher management:

• Role of top or higher management is extremely important for the business unit to follow business ethics.
• Their approach and leadership towards business ethics can motivate and drive all the employees of the organization to fall in line and follow the ethics maintained by the organization.

2. Publishing directional rules:

• Management should draft and print guidelines to be followed for business ethics. These prints then should be put at various important locations of the business unit to constantly remind all the employees about the standards and principles they need to maintain.
• Such activities inspire employees to remain focused towards ethics in all the business situations. For example, such published content would remind employees and even ‘management not to compromise on quality even when sale in low.

3. Establishing structure to follow business ethics:
Business units must establish frame work and structure which can then be deployed practically. For example, the unit should use its framed structure of ethics in recruiting employees or training them or maintaining books of accounts.

4. Employees participation in decision making:
Employees should be motivated to participate in framing ethics i.e. deciding business ethics and implementing ethics.

5. Evaluation of results:
The units must assess the successful implementation of business ethics in the unit. Units should take feedback at all levels and then evaluate how far it has succeeded in following the business ethics.

Multiple Choice Questions

Question 1.
What is the objective behind developing a public garden, provide low-cost medicines, free education, etc.?
(A) Political development
(B) Economic development
(C) Social development
(D) Commerce development
Answer:
(C) Social development

Question 2.
Which of the following is an optional responsibility?
(A) Business responsibility
(B) Ethical responsibility
(C) Legal responsibility
(D) None of these
Answer:
(B) Ethical responsibility

Question 3.
Who gave the concept of pro-company?
(A) J.S. Watson
(B) H. L. Smith
(C) Peter F. Drucker
(D) H. R. Boven
Answer:
(D) H. R. Boven

Question 4.
When was the concept of pro-company initiated in USA?
(A) 1963
(B) 1921
(C) 1955
(D) 1978
Answer:
(A) 1963

Question 5.
‘Pro-company social responsibility refers to a company that works for the financial development of company, works for improving quality and standard of lives and also, shows ethical commitment towards society’. Who gave this definition?
(A) World Trade Organization
(B) World Business Council
(C) GATT committee
(D) SAARC Council
Answer:
(B) World Business Council

Question 6.
It is now mandatory for a company to form a committee of members who would look after company’s social responsibilities.
(A) 2
(B) 3
(C) 5
(D) Minimum 3
Answer:
(D) Minimum 3

Question 7.
Who has emphasized that the companies should observe business ethics via. social responsibility?
(A) Our political system
(B) Companies Act, 2013
(C) Ministry of law
(D) Both (B) and (C)
Answer:
(C) Ministry of law

Question 8.
Which of the following does not form a level of social responsibility of business?
(A) Responsibility as per choice
(B) Legal responsibility
(C) Financial responsibility
(D) None of these
Answer:
(D) None of these

Question 9.
Stake holding group refers to
(A) People who have invested their money in the company
(B) Employees and owners
(C) Customers
(D) All who are directly/indirectly associated with company
Answer:
(D) All who are directly/indirectly associated with company

Question 10.
Which of the following is not an internal stake-holder?
(A) Employee
(B) Investor
(C) Owner
(D) None
Answer:
(D) None

Question 11.
Which of the following is an external stake holder?
(A) Customer
(B) Society
(C) Supplier
(D) All
Answer:
(D) All

Question 12.
It is not a company’s social responsibility towards its owners with respect to
(A) Involving them in manufacturing processes
(B) Capital growth
(C) Involving in decision making
(D) Both (B) and (C)
Answer:
(A) Involving them in manufacturing processes

Question 13.
Providing necessary information to investors as a part of social responsibility dees not refer to
(A) Informing current financial status of the company.
(B) Inform expected growth in investment.
(C) Informing personal net worth of each director informing.
(D) Inform about expansion of plant with foreign joint venture.
Answer:
(C) Informing personal net worth of each director informing.

Question 14.
Maintaining standard of living falls under social responsibility towards
(A) Employees
(B) Consumers
(C) True owners
(D) Society
Answer:
(A) Employees

Question 15.
Which of the following are not compulsory facilities with respect to social responsibility towards employees?
(A) Providing proper ventilation
(B) Providing fan
(C) Providing air-conditioning
(D) All of these
Answer:
(D) All of these

Question 16.
A company must give recognition to employee union in order to
(A) Safeguard itself from legal hassles
(B) Keep them motivated
(C) Followed guidelines of companies Act, 2013
(D) Maintain constant production in the unit.
Answer:
(B) Keep them motivated

Question 17.
Which of the following does not falls into providing encouragement to employees as a part of social responsibility of business?
(A) Providing free cinema tickets
(B) Asking employees to go on a family vacation.
(C) Male boss asking a female employee for dinner
(D) None of these
Answer:
(C) Male boss asking a female employee for dinner

Question 18.
Misleading advertisements
(A) Increase company’s reputation
(B) May make customers feel that they are cheated
(C) Hurt social set-up and well being
(D) Both B and C
Answer:
(D) Both B and C

Question 19.
‘A business should be managed in such a way that it balances interest of units and society’ were the words of
(A) Peter F .Drucker
(B) J. S. Watson
(C) H.R. Boven
(D) H. L. Smith
Answer:
(A) Peter F .Drucker

Question 20.
Select the odd one out.
(A) Provide proper atmosphere and facilities at work.
(B) Capital security and growth
(C) Social security
(D) Flexible attitude of top management
Answer:
(B) Capital security and growth

Question 21.
Which of the following is not a social responsibility of business towards consumers?
(A) Continuity of supply of products
(B) Selling reasonably priced products
(C) Flexible approach of management
(D) Grievance reddressal
Answer:
(C) Flexible approach of management

Question 22.
Which of the following is not an element of business ethics?
(A) Commitment of higher management
(B) Publishing ethics and pasting them
(C) Structural formation
(D) None of these
Answer:
(D) None of these