Social Responsibility of Business and Business Ethics Class 11 Business Studies

Social Responsibility of a Business: 

Social Responsibility of business refers to the obligation of the business towards the society.

Arguments in favour of Social Responsibility:

1. For growth and existence: A business which fulfills its social responsibilities enjoys a good public image and thus enjoys the support of the society. Without fulfilling its social responsibilities, a business cannot survive and grow.
2. Long term interest of the firm: It is in the long term interest of a business firm to fulfill its social responsibilities because a socially responsible business has a better public image and thus prospects of growth in the long run.
3. Avoidance of government regulation: If a business fails to meet its social responsibilities or indulges in some anti-social activity, it may invite action by the government. So, it is in the interest of the business to voluntarily fulfill its social obligation and avoid unnecessary intervention by the government. 
4. Maintenance of society: Business is one of the important pillars on which society survives. It is the responsibility of business to take care of society’s needs. If it fails to do so, the concerned groups may resort to anti social activities. 
5. Availability of resources with the business: A business enterprise has considerable financial and human resources which can be effectively used for solving problems of the society.
6. Holding business responsible for social problem problems: A large number of problems like environmental pollution, corruption, unsafe work places etc arise due to activities of business enterprise. So, it is a morel duty of a business to help society in solving such problems. 
7. Better environment for doing business: There are little chances for the success of business when there are diverse problems in a society. buy contributing to solving the problems of the society, ab business is creating a better environment for doing business. 
8. Converting problems into opportunities: Business can use its skill of converting risky situations into profitable opportunities for solving social problems. 

Arguments against Social Responsibility

1. Violation of profit maximisation objective: The main aim of every business firm is to earn maximum profits. Hence, it has been argued that assuming social responsibility is against this profit. 
2. Burden on Consumers: In order to cover the cost, the businessmen increase the prices of products  and hence shift the burden to the consumers. 
3. Lack of social skills: As per this argument, businessmen have neither the understanding nor the required training to solve social problems. 
4. Lack of broad public support: Interference of business in public programmes is not liked by the public. So, business may be not get support of the public. 

Responsibilities of Business towards different stakeholders of society:

1. Towards Owners:

• Ensuring safety of their investment. 
• Ensuring fair return on their investment. 
• Providing regular, accurate and complete information about economic affairs of the business.

2. Towards Customers:

• Providing good quality products at fair prices.
• Providing full information about the product and the company. 
• Providing after sale services.
• Not indulging in unfair trade practices like adulteration, poor quality, misleading advertising etc. 

3. Towards Employees:

• Providing fair salaries/wages.
• Providing safe working conditions.
• Providing opportunities for their growth.

4. Towards Government:

• Paying taxes regularly. 
• Complying with government rules and regulations. 

5. Towards Community:

• Providing employment opportunities to people. 
• Using environmental friendly techniques. 
• Not indulging in practices like corruption. 

Role of Business in Environmental Protection:

1. Developing work culture for environmental protection.
2. Involving all departments and workers and employees in the programmes of environmental protection,
3. Clear cut policies for the use of better quality materials and techniques. Scientific system should be used for disposal of wastes.
4. Complying with rules and laws made by government.
5. Participating in government programmes on environmental protection such as checking deforestation, plantation of trees, cleaning of polluted rivers etc.
6. Arranging workshops on pollution control to create awareness among suppliers, dealers and customers.
7. Evaluating the programmes related to pollution control on the basis of cost benefit analysis. 

Business Ethics:

Concept: Business Ethics refers to socially determined moral principles which govern business activities. 

Examples:

• charging fair prices from customers
• giving fair and just treatment to the workers
• following the rules and regulations 

Importance:

1. It improves image of business in the eyes of public. 
2. It helps the business in earning public's confidence and trust. 
3. It leads business towards higher profits and greater success. 

Elements of Business Ethics:

1. Top Management Commitment: It is the duty of top level managers to guide the whole organisation towards ethical behaviour. The CEO and other top level managers should provide strong leadership for developing and upholding the values of the organisation. 
2. Involvement of Employees at all levels: Involvement of employees at all levels is essential because it is the employees who implement the policies.
3. Publication of a Code: Business firms should lay down certain code of conduct to be followed in their organisations. The codes cover areas such as adherence to laws, honesty, product safety and quality, employment practices etc. 
4. Establishment of Compliance Mechanism: Suitable mechanisms should be established by the business firms to ensure that decisions and actions are taken in accordance with the ethical standards. 
5. Measurement of Results: The management should atleast monitor whether the ethical standards are followed or not.