RYAN INTERNATIONAL SCHOOL

SOHNA ROAD, GURGAON

2017-2018
CLASS : XI SUB : Business Studies

Solved Assignment Chapter 6

Social Responsibilty towards different interest groups:

A business operates in the society. It comes into contact with several groups of the society such
as shareholders, customers, employees, suppliers, competitors, government, etc. Business is
responsible to all these interest groups.

1. Responsibility towards Shareholders/ Owners/ Investors

(a) To provide fair and regular return on their investment (dividend or interest).
(b) To ensure safety of their investment.
(c) To maximize wealth of shareholders, i.e., increase in market value of shares.
(d) To provide regular, accurate and full information about the functioning of business.
(e) To provide information about the schemes of future growth.
(f) To protect the interest of all types of investors in the business.
(g) To offer opportunities for participation of shareholders in policy decisions.

2. Responsibility towards the Workers/Employees

(a) To pay fair wages and salaries to its workers and employees.
(b) To provide safe and healthy working conditions.
(c) To ensure welfare facilities such as medical care, housing, recreation, insurance cover,
etc.
(d) To win their cooperation by creating better human relations in the business.
(e) Employees should be involved in decision making process especially when decisions
are related to them.
(f) To provide opportunities for the growth and development of employees.
(g) The efforts of employees' should be recognized and rewards should be given for better
performance, as it leads to job satisfaction.

3. Responsibility towards the Consumers/Customers

(a) To supply good quality products and services at fair prices.
(b) To ensure regular and adequate supply of goods.
(c) Not to follow unfair trade practices such as, black marketing, under-weighing,
adulteration, hoarding, bad quality of goods and services, misleading advertising, etc.
(d) To handle consumers' grievances quickly and carefully.
(e) To inform the customers about new products and new uses of the existing products.

4. Responsibility towards the Government

(a) To respect the laws of the land.
(b) To pay taxes honestly, regularly and on time.
(c) To adopt fair dealing in foreign trade in order to maintain country's reputation.
 (d) To support government in solving various national problems like poverty, illiteracy,
over-population, unemployment, etc.
(e) To discourage the tendencies of concentration of economic power and monopoly.
(f) To work and contribute towards the rescue and relief work in case of earthquake, flood,
etc.

5. Responsibility towards the Community

(a) To generate more employment opportunities.
(b) To ensure efficient use of scarce resources.
(c) To help the weaker sections of the society such as widows, physically challenged
people, scheduled tribes, etc.
(d) To promote national integration.
(e) To preserve social and cultural values.
(f) To protect the natural environment from all types of pollution.
(g) To provide assistance to religious institutions, hospitals, dispensaries, educational
institutions, etc.

6. Responsibility towards Suppliers

(a) To ensure fair, regular and timely payments to the suppliers.
(b) To keep the suppliers informed about future plans.
(c) To protect and assist small scale suppliers by placing orders with them.
(d) To adopt fair dealings with the suppliers.
(e) To help the suppliers in improving the quality of their products.
 Application, Hots (Higher Order Thinking Skills)
And Evaluation Based Questions with Answers
1. Business has various social responsibilities towards different interest groups. Identify the
relevance interest groups highlighted in the following cases.
(a) Entrepreneur should act according to well accepted values of the society
(b) Business should provide fair return on their capital investment.
(c) Business should avoid any type of pollution.
(d) Business enterprise must pay taxes regularly and honestly.
(e) Business should supply good quantity goods at reasonable prices.
(f) There should be proper and safe working conditions.

Ans. (a) Community. (b) Shareholders. (a) Community. (d) Government. (e) Consumers (f)
Workers.

2. Identify the kind of social responsibility in the following statements :

(a) Contribution to earthquake victims.
(b) It refers to moral obligations of a business enterprise.
(c) Produce goods as per the needs of the society and sell them at a profit.
(d) Business enterprise should follows laws of the country.
(e) Charity to an orphanage.
(f) Respecting the religious sentiments of all groups while promoting a product.
(g) This responsibility is compulsory for all business enterprises.
(h) This responsibility is voluntary for all business enterprise.

Ans. (a) Discretionary responsibility. (b) Ethical responsibility. (c) Economic responsibility. (d)
Legal responsibility. (e) Discretionary responsibility. (f) Ethical responsibility. (g) Legal
responsibility. (h) Discretionary responsibility.

3. Business has to safeguard not only the interests of the parties but the interest of several other
parties also like consumers, suppliers, competitors/rivals, government, community and the
world. Today, only that business is regarded as good which along with the interests of the
owner takes care of the interests of all these parties also.
Which concept of business has been talked about in this statement? Identify that concept and
state its meaning.

Ans. Social responsibility. (Explain concept)

4. A company has defined its responsibility towards various interest groups are follows :
(a) To add value to the capital on a continuous basis to ensure capital appreciation.
(b) Refraining from indulging in profiteering, hoarding and creating artificial scarcity of
products.
(c) Encouraging talent and promoting civic sense among members of the community.
i. Mention the interest group with whom the actions pertaining to discharge of
social responsibility are related.
ii. Identify any two values which are involved in the above actions.
Ans. (a) (i) Owner. (ii) Customers. (iii) Society.
(b) Values
(i) Concern for customer satisfaction. (ii) Social welfare.

5. Mr. Tarun and Mr. Aryan are planning to form a partnership business of selling food items.
Mr. Tarun emphasis on maintaining the standards by providing good quality food and hygienic
ambience, etc. And he also shared his view that whatever food items would be left unsold at
the end of the day they will distribute the same among the road side beggars. But Mr. Aryan
was not convinced of this point of view and claimed that we can consume some of the items
next day. Both the partners argued on the same and later on Mr. Tarun convinced Mr. Aryan by
explaining that how it is important for a business to serve the society.
Write any four such factors which Mr. Torun must have explained to Mr. Aryan.

Ans. Case for social responsibility (Explain all points favouring Social Responsibility)

6. Mr. Mohit is the owner of toys manufacturing factory. His main motive is maximizing the
profit. For which he is supplying low quality products at high prices. He hires children as
labourers from villages at very cheap rates to work in his factory. Also he does not provide
good working conditions to them. Even he is not bothered about the pollution caused by his
factory. As a result the labour turnover and absenteeism increased in his factory. With all this
he is very upset and could not understand the problem.
(a) What is lacking by Mr. Mohit in the above case?
(b) In the above para towards whom he did not meet social responsibility?
(c) Give any two suggestions to Mr. Mohit so as to improve the condition of his factory.

Ans. (a) Social responsibility.

(b) Towards the consumers, workers and community.
(c) (i) He should provide good working environment to the employees.
(ii) He should not hire child labour and also increases wages of the employees.

7. Rajat runs a chemist shop in a small town near a government hospital. Due to his proximity to
the hospital, he is able to cater to a large number of customers. Though Rajat can supply
generic medicines which are comparatively much cheaper, he normally supplies medicines
from pharma companies, as it helps him in earning much greater profit margins.
Identify the social responsibility which Rajat is considering while doing his business.

Ans. Economic responsibility.

8. A BPO is providing 24 x 7 handling of customers’ queries and grievances. But in this process,
it is making its employees work for 16 hours in a day. They are not even providing a rest of
more than 10 minutes in a day.
(a) Which group of social responsibility is being taken care by the BOO?
(b) Which group of social responsibility is being not taken care by the BPO?
(c) Write any two values which are not lacking in the organisation.

Ans. (a) Social responsibility towards customers

(b) Social responsibility towards employee/workers.
 (c) (i) Care of employee health. (ii) Sympathy towards employee

9. There is group discussion between two commerce students on the topic cocial responsibility of
business. The opinion of one student is business is socially responsible towards the society
while the opinion of another student is that the main objective of business is to earn profit so
business should not follow the concept of social responsibilities. Give your opinion by giving
two arguments in favour and against social responsibilities.

Ans. Explain arguments in favour of social responsibility.

Explain arguments against social responsibility.
Conclusion : Both are correct.

10. Atul is the owner of readymade garments factory. His main motive is maximising the profit.
For this, he has given misleading advertisement and is supplying low quality products. Also, he
has not provided right kind of working conditions in his factory.
He is not behaving as a good citizen of the society and is violating the well accepted values of
the society. As a result, his efficient employees have started leaving the job and have joined his
competitor.
Identify the three different groups towards whom Atul is not performing his social
responsibility by quoting the lines.

Ans. (a) Responsibility towards the workers.

'.. he has given misleading advertisement and is supplying low quality products.'
(b) Responsibility towards consumers.
'.. he has not provided the right kind of working conditions in his factory.'
(c) Responsibility towards the community and government.
'... he is not behaving as a good citizen of the society and is violating the well accepted values
of the society.'

11. Super Stationers Ltd. is successfully running the business of manufacturing registers and
notebooks for school and college children. It is producing goods and services that society
wants and sells them at a profit. It performs its responsibility to operate within the laws of the
land. It is respecting the religious sentiments and dignity of people while advertising for a
product. It earned a huge profit in the financial year 2016-17. It has provided charitable
contributions to the people affected by earthquake.
The above para explains the various kinds of social responsibility of business. Name them by
quoting the lines from the above para.

Ans. Various kinds of social responsibility of business are :

(a) Economic responsibility
‘It is producing goods and services that society wants and sell them at a profit.’
(b) Legal responsibility
'It performs its responsibility to operate within the laws of the land.'
(c) Ethical responsibility
‘It is respecting the religious sentiments and dignity of people while advertising for a
product.'
(d) Discretionary responsibility
 ‘it has provided charitable contributions to the people affected by earthquake.'

12. Harsh Enterprises Ltd. is a cement manufacturing unit set up in the backward region of Orissa.
They have given employment to underprivileged sections of the society including women. It
has taken a lead in providing own solutions to environmental problems. They take up proper
steps not only to check all sorts of pollution but also to protect environmental resources.
(a) Mention four steps which can be taken by Harsh Enterprises Ltd. for environmental
protection.
(b) Write any two values followed by business enterprises in this case.

Ans. (a) Explain points on Role of business in environmental protection.

(b) Values (any two)
(i) Employment generation. (ii) Upliftment of women. (iii) Controlling pollution.

13. Strategy Ltd. company deals in manufacturing, sale and exchange of medicines. The workers
of this company always fall ill due to unhealthy working conditions. The company is also in
the habit of providing incomplete information to its stakeholders and consumers.
(a) Identify two interest groups towards whom Strategy Ltd. is not fulfilling its social
responsibility by quoting the lines.
(b) Also state any one value not followed by the Strategy Ltd.

Ans. (a) (i) Responsibility towards the workers/employees.

'The workers... working conditions.'
(ii) Responsibility of business towards the shareholders/owners/investors
'The company... to its stakeholders and consumers.'
(b) Values :
(i) Care for employees health. (ii) Transparency. (iii) Business ethics.

14. Lakshay Ltd. is an IT company having many shareholders. In reality the financial position of
the company is weak. But in its meeting with shareholders it presented a very good picture of
the financial affairs of the company to attract more of them.
(a) Is the company showing a socially desirable behaviour? Give reason.
(b) Social responsibility towards which group is ignored in above para.
(c) Write any two values ignored by the company.

Ans. (a) No, the company is showing false report of the financial affairs in the meeting.
(b) Social responsibility towards owners and investors is ignored in above para.
(c) Values :
(i) Honesty (ii) Business ethics

15. Sarthak a wholesaler selling rice, stopped the supply of his product in order to raise the
demand and then supplied rice at higher prices.
(a) A he showing socially desirable behaviour?
(b) Social responsibility towards which group is ignored in above para.
(c) Write any two values overlooked by Sarthak.
Ans. (a) No, it is the social responsibility to ensure regular supply of its goods and service to
consumers.
(b) Social responsibility towards consumer ignored in above para.
(c) Values :
(i) Business ethics (ii) Honesty

16. Mukul Ltd. is filing its income tax returns on time. They are also updating their shareholders
about their projects and provide for return to them. Towards which interest group are they
fulfilling their responsibility? Also write any two values which are followed by the company.

Ans. Shareholders or owners or investors

Value Points
(i) Transparency (ii) Fairness (iii) Honesty

17. Lamba Ltd. deals in health drinks. It is found that there are components of pesticides in their
drinks. Identify which two kinds of responsibilities and values are missing from this approach.

Ans. Legal and ethical responsibility.

Value Points
(a) Concern for health of the public (b) Business ethics (c) Honesty

18. A well-known fragrance company while advertising its perfumes presents females in a
derogatory manner which offends religious group also. Which kind of social responsibility is
being neglected? Also, write any two values which have been compromised.

Ans. Ethical responsibility.

Value Points
(a) Sentiments of people (b) Interest of society.

19. Kapoor Ltd. is providing facilities for their female staff like 'Day Care Centre' for kids and
'Work from Home Facility'. By doing this they are following social responsibilities towards
which interest group? Also mention any two values presenting by the company.

Ans. Ethical responsibility.

Value Points
(a) Concert, for the employees (b) Good behaviour

20. Tell Ltd., a renowned computer manufacturing company follows the vision of 'reaching new
heights' with its people on its side". It not any provides quality products at reasonable price but
also provides various facilities to its employees for5 years of service. It also provides computer
skills to youth in remote areas free of cost.
(a) What according to you are the business ethics of the company?
(b) It is fulfilling social responsibilities towards which interest groups?
(c) What kind of social responsibilities are being fulfilled above?

Ans. (a) (i) Selling quality goods at fair prices.

(ii) Giving fair treatment to workers.
 (b) (i) Consumer/Customers. (ii) Workers/Employees (iii) Community
(c) (i) Ethical responsibility. (ii) Discretionary responsibility.

21. There is a group discussion taking place in Class-XI regarding 'social responsibility of
business'. Vineet feels that a business should be socially responsible towards the society at
exists in the society while Ramesh is against it as the basic objective of a business is to earn
profit. Who do you think, you will favour? Write any four points with respect to your opinion.

Ans. For 'Case for Social Responsibility'. (Explain)

For Arguments Against Social Responsibility'. (Explain)

22. 'Credible Bank' is providing e-banking facility to its customers. A group of employees of the
bank are sharing the personal details of the customers with some unscrupulous individuals to
back their accounts.
(a) Identify the e-business risks highlighted above.
(b) Towards which interest group is the bank not paying attention?
(c) Write any two values lacking in the employees.

Ans. (a) (i) Hacking. (ii) Risks of threat of intellectual property and privacy.
(b) Consumers/Customers.
(c) Consumer/Customers.
(i) Obedience for bank's rule. (ii) Responsible behaviour (iii) Professional ethics
(iv) Honesty.

23. A BPO is providing 24 x 7 handling of customers queries and grievances. But in this process, it
is making its employees work for 16 hours a day. They are not even provided a rest of more
than 30 minutes in a day.
(a) What is outsourcing?
(b) Which responsibility is not being taken care of by the BPO?
(c) Interests of which group are not being catered to here?
(d) Write any two values which are lacking in the organisation.

Ans. (a) Meaning of outsourcing. (Explain)

(b) Ethical responsibility.
(c) Workers/employees.
(d) Value Points
(i) Care for employees’ health. (ii) Sympathy (iii) Good behaviour. (iv) Humanity
(v) Respect towards employees

24. How is social responsibility of business different from legal responsibility?

Ans.
Legal Responsibility Social Responsibility
(a) Legal responsibility means compliance (a) Social responsibility of business refer to
with the law. its obligation to take those decisions and
perform those actions which are considered
desirable in terms of the objectives and
 values of our Society.
(b) Examples Timely and honestly payment (b) Examples: Generating employment
of taxes, not to create pollution and so on. opportunities to the physically challenged
people of the society, supply of quality
goods, and services at fair prices, etc.
(c) Legal responsibility is a narrower concept (c) Social responsibility has a wider scope
as it is confined to obey the legal provisions. and covers legal responsibility also. It
contains norms or standards of behaviour
higher than legal responsibility.

25. "Business is essentially a social institution and not merely a profit making activity." Explain
this statement.

Ans. No doubt, business is a profit making activity. Profit is a source of income for a businessman, a
source of funds for business growth and an index of performance of the business. But business
is not merely a profit making activity; it is essentially a social institution because it is the
creation of the society. Business activities cannot be pursued in isolation from the society.
Business is a part of society. It gets inputs from the society and supplies its outputs to the
society. If a business fails to discharge social responsibility, the society will either compel it to
do so or may no longer permit it to survive. No business firm can grow and survive unless it
enjoys a good social image. Thus, a business is a socio-economic institution.
Following are the social responsibilities which a business has to fulfill :
(a) To pay fair and regular return on investment to the shareholders/owners and to ensure
the safety of their investment.
(b) To pay fair wages and salaries to the workers and employees and to provide them
healthy working conditions.
(c) To respect the laws of the land and to pay taxes regularly and honestly.
(d) Not to adopt unfair trade practices like black marketing, hoarding, adulteration,
misleading advertising, bad quality of goods and services, etc.
(e) To make fair and regular payments to suppliers.
(f) To help the weaker sections of society such as widows, scheduled tribes, disabled
people orphans, etc.
(g) To cooperate with the government voluntarily in solving national problems such as
illiteracy, poverty, over-population, etc.

26. “Like an individual business firm should also be loyal citizen of the state.” Discuss.

Ans. It is right to say that like an individual business firm should also be loyal citizen of the state. It
must respect the laws of the land and pay taxes regularly and honesty. It must behave as a good
citizen and act according to the well accepted values of the society. It must protect the natural
environment and should avoid bad, effluent, smoky chimneys, unhealthy working conditions,
ugly buildings. It must develop a proper image in society through continuous interaction with
different groups of people.

27. Identify the type of social responsibility in the following statements :

(a) Respecting the religious sentiments of all groups while promoting a product.
(b) Helping affected people during flood.
(c) Produce goods and to sell them at a profit.
Ans. (a) Ethical responsibility. (b) Discretionary responsibility. (c) Economic responsibility.

28. In the recent case of Satyam Ltd. whereby its top official had put the interest of shareholders at
stake. "In spite of dominant role of profit in the running of business today, there is a growing
realisation all over the world that now it is very important for every business to assume
Corporate Governance:' Illustrate with reasons.

Ans. Corporate governance or corporate social responsibility (CSR) can be defined as achieving
commercial success in ways that honour ethical values and respect people, communities and
the natural environment. CSR means addressing the legal, ethical, commercial and other
expectations that society has from corporates who should take decisions and actions that fairly
balance the claims of all the stakeholders, including shareholders, creditors, consumers,
competitors, workers, government and society at large.
A company is managed and controlled by its top officials (Board of Directors, CEO, etc.). If
the top officials put the interest of shareholders at stake for their private gain, it is really, a
crime. There is a growing realization all over the world that now it is very important for every
business to assume corporate governance due to the following reasons
(a) Long-Term Interest of Business Itself : The businessmen who ignore the interest and
satisfaction of its various stakeholders lose their goodwill and image. So, it is in the
interest of business to assume corporate governance.
(b) Public Support : Business can't exist in isolation. It needs the support of banks,
financial institutions, government, employees and customers. An enterprise can get best
support of all these parties only if it assumes Corporate Governance.
(c) Threat of Government Regulation : When business enterprises like Satyam Ltd.
operate in a socially undesirable manner, government takes appropriate action against
them to safeguard public interest.
(d) Pressure of Labour Movement : Now-a-days workers has become more educated,
powerful and organised due to formation of trade unions.
(e) Impact of Consumer Consciousness : Today, consumers have become conscious of
their rights and powers due to mass media and development of education.

29. How is business ethics different from Law?

Ans. (a) Business ethics is not related to law. Business ethics contains norms or standards of
behaviour higher than law. In other words, scope of law is narrow whereas scope of business
ethics is wider and scores a variety of prevailing norms. Business ethics goes beyond what is
required by law.
(b) All acts which are against the law are punishable but all unethical behaviour is not
punishable.
30. Strong Ltd., a cement manufacturing company earned a profit of Rs. 50 crores during the year
2013-14. The management decided to donate 10% of their profit to an orphanage in their
locality.
(a) Identify the concept behind this decision.
(b) Explain any three kinds of the concept identified in (a) above.

Ans. (a) Social responsibility.

(b) Kinds of Social Responsibility to be explained.
31. Harsh and Company is the leading manufacturer in mobile phones. It provides different
category of mobile phones. For this purpose they interact with different suppliers to get
necessary raw material through internet to manufacture its products. Dinesh Ltd. is the leading
supplier of battery to them. Harsh and company use network of computers to interact with their
suppliers. Transactions like placing orders, delivery of components, making payments, etc. are
done electronically through internet. The company finds dealing through internet, quite
convenient. They are able to reduce their cost. Moreover, internet has enabled them to interact
with many suppliers and select the one which offers them required raw material at low price.
In addition to the above, they also adopt effective measures to protect the environment
from the dangers of pollution.
(a) Identify the scope of e-business highlighted above.
(b) List any two benefits provided by e-business.
(c) Write any two steps which a company should take to protect the environment from the
dangers of pollution.
(d) Identify any two values highlighted in the above case.

Ans. (a) Business to Business (B 2 B commerce)

(b) Benefits of e-Business :
(i) Ease of formation and lower Investment Requirements.
(ii) Convenience.
(c) (i) Top management's commitment to create, maintain and ii and develop work
culture for environmental protection and pollution prevention. This commitment should
be shared throughout the enterprise by all divisions and employees.
(ii) Clear-cut policies/programs should be framed for purchasing good quality raw
materials, employing superior technology of production, using scientific techniques of
disposal and treatment of wastes.
(d) Values (any two) :
(i) Environment protection. (ii) New and better ways of doing business.
(iii) Use of technology.

32. Mr. Nitin Kumar is working as a Public Relation Officer (PRO) with Coca-Cola India Ltd. The
company along with NDTV India and Sachin Tendulkar (Brand Ambassador) is running
‘Support My School’ campaign. It is planning to support a Lucknow based NGO working for
education of children in villages using modern methods of teaching like e-Choppals.
(a) Name two other companies which are undertaking similar projects to discharge
corporate social responsibility.
(b) If the company finds it difficult to carry on this project as it does not permit the
company it to concentrate on core activities, then what is the remedy available to the
company.
(c) Explain any two arguments in favour of company undertaking its social responsibility.
(d) Identify any two values shown by Coca-Cola India Ltd.

Ans. (a) (i) ITC (ii) Infosys

(b) Outsourcing
(c) (i) Justification for Existence and Growth. (Explain)
(ii) Long-term Interest of the Firm. (Explain)
(d) Values : (any two)
 (i) Fulfilling social responsibility.
(ii) Building good image and goodwill of the company in the eyes of public.
(iii) Initiative.
(iv) Help in increasing literacy rate.

33. An industrial unit, working in a backward area opens schools for education at nominal cost for
the children of its employees and local people. By this act which value is promoted here?

Ans. Value Points

(a) Increasing literacy rate. (b) Development of society.
(c) More employment opportunities in backward areas.

34. An entrepreneur wants to start his business in backward area because government gives many
incentives and rebates in taxes, which results in low cost and he will be able to sell the product
at low prices. There he will be able to get large area by deforestation. Which values are being
affected here? (any three)

Ans. Value Points

(a) Environmental degradation (due to deforestation).
(b) Availability of goods at low cost
(c) Development of backward areas
(d) Increasing employment opportunities in backward area

35. A tea producer used such packets/things for packing tea' which can be used even after
consuming the tea inside for other purposes. In this which values are being affected by him.
Ans. Value Points
(a) Optimum utilization of resources (reuse of the container).
(b) Environment protection.

36. ABC Ltd., a fire cracker manufacturing firm had launched some new products on Diwali which
attracted many buyers. However products Package did not have adequate 'directions for use',
because of which many accidents took place. Despite the accidents, the product was not
withdrawn from the market by the manufacturer.
Mention the values that have been overlooked by ABC Ltd. (any three)

Ans. Value Points :

(a) Concern for environment. (b) Concern for human life.
(c) Social responsibility/responsible behaviour. (d) Sensitivity.

37. A cosmetic manufacturing company claims in advertisement that its face cream improves the
face complexion. On using it was found incorrect. Here, which values are being ignored?

Ans. Value Points

(a) Cheating the consumers by misleading advertisements.
(b) Affect the health of public.
38. Subhash is a sweet maker (Halwai), who collects milk from village to village and prepares
sweet on Deepawali, due to increased demand, he purchased Khoya from other shopkeeper
which was adulterated, because it was not possible to meet the demand from collected milk.
For meeting the demand quickly he has not maintained cleanliness while preparation of sweets.
He kept two children for packing the sweet and one female at cash counter. Which social
values he is affecting and how? (any three)

Ans. Value Points :

(a) Use of adulterated Khoya will badly affect the health of consumer.
(b) Child labour is a crime.
(c) Spreading diseases due to non-consideration of cleanliness.
(d) By employing females, equal opportunities to females.

39. A manufacturer of refrigerator uses new technology in place of using harmful gases, which do
not cause out pollution. Which value is being followed here?
Ans. Value Points
(a) Environment protection (b) Fulfillment of social responsibility.

40. In recent times the Government has increased the prices of diesel and LPG. Which value is
being overlooked here?

Ans. Value Points

(a) Fall in standard of living. (b) Increase in domestic expenditure.
(c) Increase in the cost of agricultural products.

41. Removal of mobile towers from residential area is being planned by the government to
promote which value?

Ans. Value Points

(a) Environment protection. (b) Safety of birds. (c) Safety of health of society

42. Government is planning to construct a warehouse in remote area to store necessary goods so as
to make them available even at the time of bad weather regularly. Which values are being
considered here to be achieved by the government? (any three)

Ans. Value Points

(a) Stability in prices. (b) Regular supply of goods.
(c) Fulfillment of social responsibility. (d) Control on hoarding and black-marketing
43. “Business is essentially a social institution and not merly a profit making activity.” Explain this
statement.
Ans. No doubt, business is a profit making activity. Profit is a source of income for a businessman, a
source of funds for business growth and an index of performance of the business. But business
is not merely a profit making activity; it is essential a social institution because it is the
creation of the society. Business activities cannot be pursued in isolation from the society.
Business is a part of society. It gets input from the society and supplies its output to the socity.
If a business fails to discharge social responsibility, the society will either compel it to do so or
may no longer permit it to survive. No business firm can grow and survive unless it enjoys a
good social image. Thus, a business is a socio-economic institution.
Following are the social responsibilities which a business has to fulfill :
(a) To pay fair and regular return on investment to the shareholders/owners and to ensure
the safety of their investment.
(b) To pay fair wages and salaries to the workers and employees and to provide them
healthy working conditions.
(c) To respect the laws of the land and to pay taxes regularly and honestly.
(d) Not to adopt unfair trade practices like black marketing, hoarding, adulteration,
misleading, adverting, bad quality of goods and services, etc.
(e) To make fair and regular payments to suppliers.
(f) To help the weaker sections of society such as widows, scheduled tribes, disabled
people, orphans, etc.
(g) To cooperate with the government voluntarily in solving national problems such as
illiteracy, poverty, over-population, etc.
44. "Like an individual business firm should also be loyal citizen of the state." Discuss.
Ans. It is right to say that like an individual business firm should also be loyal citizen of the state. Lt
must respect the laws of the land and pay taxes regularly and honestly. It must behave as a
good citizen and act according to the well accepted values of the society. It must protect the
natural environment and should avoid bad, effluent, smoky chimneys, unhealthy working
conditions, ugly buildings. It must develop a proper image in society through continuous
interaction with different groups of people.

45. Identify the type of social responsibility in the following statements :

(a) Respecting the religious sentiments of all groups while promoting a product.
(b) Helping affected people during flood.
(c) Produce goods and to sell them at a profit.
Ans. (a) Ethical responsibility.
(b) Discretionary responsibility.
(c) Economic responsibility.

46. In the recent case of Satyam Ltd. whereby its top official had put the interest of shareholders at
stake. "In spite of dominant role of profit in the running of business today, there is a growing
realisation all over the world that now it is very important for every business to assume
Corporate Governance." Illustrate with reasons.
Ans. Corporate governance or corporate social responsibility (CSR) can be defined as achieving
commercial success in ways that honour ethical values and respect people, communities and
the natural environment. CSR means addressing the legal, ethical, commercial and other
expectations that society has from corporates who should take decisions and actions that fairly
 balance the claims of all the stakeholders, including shareholders, creditors, consumers,
competitors, workers, government and society at large.
A company is managed and controlled by its top officials (Board of Directors, CEO, etc.). If
the top officials put the interest of shareholders at stake for their private gain, it is really, a
crime. There is a growing realization all over the world that now it is very important for every
business to assume corporate governance due to the following reasons :
(a) Long-Term Interest of Business Itself : The businessmen who ignore the interest and
satisfaction of its various stakeholders lose their goodwill and image. So, it is in the
interest of business to assume corporate governance.
(b) Public Support : Business can't exist in isolation. It needs the support of banks,
financial institutions, government, employees and customers. An enterprise can get best
support of all these parties only if it assumes Corporate Governance.
(c) Threat of Government Regulation : When business enterprises like Satyam Ltd.
operate in a socially undesirable manner, government takes appropriate action against
them to safeguard public interest.
(d) Pressure of Labour Movement : Now-a-days workers has become more educated,
powerful and organised due to formation of trade unions.
(e) Impact of Consumer Consciousness : Today, consumers have become conscious of
their rights and powers due to mass media and development of education.

47. How is business ethics different from law?

Ans. (a) Business ethics is not related to law. Business ethics contains norms or standard of
behaviour higher than law. In other words, scope of law is narrow whereas scope of business
ethics is wider and scores a variety of prevailing norms. Business ethics goes beyond what is
required by law.
(b) All acts which are against the law are punishable but all unethical behaviour is not
punishable.