Samacheer Kalvi Class 11 Commerce Solutions Chapter 17 Social Responsibility of Business and Business Ethics

I. Choose the Correct Answer

Question 1. Which type of Responsibility gives the benefit to the Society out of its profits earned?
(a) Legal
(b) Ethical
(c) Moral
(d) Economic
Answer: (c) Moral
In simple words: Moral responsibility means a business decides to help society using its earned money, even when not legally required. This shows the business cares about more than just making a profit.

🎯 Exam Tip: Moral responsibility goes beyond legal duties and involves doing what is considered right or fair for the community, often voluntarily.

Question 2. The Stakeholders of Socially Responsible business units are except
(a) Share Holders
(b) Employees
(c) Government
(d) Company
Answer: (d) Company
In simple words: Stakeholders are people or groups who are affected by a company's actions. The company itself is the one taking action, not a stakeholder in the same way shareholders or employees are.

🎯 Exam Tip: Remember, stakeholders are external or internal groups *affected by* the business, whereas the company *is* the business entity. Identify who benefits or is impacted by the business's decisions.

Question 3. Assuming Social Responsibility of business helps the enterprise in
(a) Increase profit
(b) Decrease profit
(c) Sustainability
(d) Equilibrium
Answer: (c) Sustainability
In simple words: When a business acts in a socially responsible way, it helps the business keep going strong and healthy for a very long time. This is called sustainability. Businesses that care for society often last longer.

🎯 Exam Tip: Social responsibility builds good public image and trust, which are key for a business to thrive and stay strong over many years.

Question 4. Socially Responsible business provides goods at
(a) high price
(b) low price
(c) reasonable price
(d) moderate price
Answer: (c) reasonable price
In simple words: A business that acts responsibly towards society makes sure its products are sold at a fair and sensible price. They do not overcharge customers.

🎯 Exam Tip: Providing goods at reasonable prices is a key aspect of economic social responsibility, ensuring products are accessible to a wider market.

Question 5. Social Responsibility towards employees represents the following except
(a) Reasonable remuneration
(b) proper facilities
(c) Social security
(d) exploitation
Answer: (d) exploitation
In simple words: Social responsibility means treating employees well, giving them fair pay, good working conditions, and security. It definitely does not include treating them unfairly or using them for profit without care.

🎯 Exam Tip: When a question asks "except," it's looking for the one option that *doesn't* fit the description. Exploitation is the opposite of social responsibility towards employees.

II. Very Short Answer Question

Question 1. What do you mean by Social Responsibility?
Answer: Social responsibility means that businesses have a duty to act in ways that benefit society. While a businessman earns success from their business, they should also return some of that benefit to the community. This is like giving back to the place that helped them grow. Many different ideas fall under this term.
In simple words: Social responsibility means businesses should help society because they get their wealth from society.

🎯 Exam Tip: When defining social responsibility, emphasize the idea of "giving back" to society and linking business prosperity to community welfare.

Question 2. Give the meaning of Social Power.
Answer: Social power refers to the significant influence that business people have over society through their decisions and actions. For example, business leaders often decide how many jobs are available, how fast the economy grows, and how money is shared among different groups. Because their choices deeply affect the lives and future of many people, this influence is called social power.
In simple words: Social power is the big influence business people have on society through their decisions about jobs, money, and economy.

🎯 Exam Tip: Highlight that social power is about the *impact* of business decisions on society, not just economic influence, and affects many aspects of people's lives.

Question 3. What is a free enterprise?
Answer: A free enterprise is a business that willingly accepts and carries out its social duties. By doing this, the business gets more freedom to make its own choices. When businesses take on social responsibilities, it helps them avoid strict government rules and actions. This means they can make business decisions more freely without much interference.
In simple words: A free enterprise is a business that fulfills its social duties, which then allows it to have more freedom from government control.

🎯 Exam Tip: Connect "free enterprise" with social obligations, noting that fulfilling these duties can help businesses maintain autonomy and avoid external regulation.

Question 4. Who are called Stakeholders?
Answer: Stakeholders are various groups or individuals who have an interest in a business organization. These groups are affected by the business's actions and decisions. Examples include shareholders, customers, employees, suppliers, the government and its agencies, labor unions, and the local community from which the business gets its resources. All these people and groups are important for the business.
In simple words: Stakeholders are all the people and groups, like customers, employees, and owners, who are interested in or affected by a business.

🎯 Exam Tip: When listing stakeholders, aim for a broad range, including both internal (shareholders, employees) and external (customers, government, community) groups.

Question 5. What is ethical Responsibility?
Answer: Ethical responsibility means a company acts in ways that society expects, even if these actions are not written down as laws. It's about doing what is right and fair. For example, an ethical company would respect people's religious feelings and dignity when it advertises products. This kind of responsibility involves acting voluntarily to do good.
In simple words: Ethical responsibility is when a company acts according to what society thinks is right and fair, even if there isn't a law for it.

🎯 Exam Tip: Emphasize that ethical responsibility involves voluntary actions and goes beyond legal requirements, focusing on societal expectations and moral values.

III. Short Answer Question

Question 1. Define the Concept of Social Responsibility?
Answer: Social responsibility means that businesses have a duty to act in ways that benefit society. Every businessman earns success from their business and should give back some of that prosperity to the community. This is a voluntary action, meaning it's not forced by law. Therefore, this act of giving back is considered the moral responsibility of the business. Since this benefit is meant for society, it's also called the social responsibility of the business.
In simple words: Social responsibility is when a business gives back to society from its earnings, acting voluntarily out of moral duty.

🎯 Exam Tip: Focus on the keywords "voluntary," "moral responsibility," and "giving back to society" when defining the concept.

Question 2. Why you do think the Social Responsibility of business is needed?
Answer: Social responsibility is important for businesses for a few reasons:
1. Self-Interest: A business can only stay successful for a long time if it takes care of some social duties. Business people often find that they succeed better when they meet society's needs and hopes. Taking care of the community helps the business itself.
2. Creation of Society: Businesses are formed by society and use society's resources like land, labor, and materials. Because of this, they should fulfill their duties towards society in return.
In simple words: Businesses need social responsibility to last longer, as it helps them meet society's needs and repay society for the resources they use.

🎯 Exam Tip: When explaining the need for social responsibility, remember to connect it to both the business's long-term survival (self-interest) and its relationship with society (creation and resource use).

Question 3. What are the benefits derived by employees of a Socially Responsible business enterprise?
Answer: Employees in a socially responsible business get many benefits:

• They receive their wages and salaries on time and regularly.
• They have proper working conditions and good welfare facilities.
• There are chances for them to grow and have better career opportunities.
• They get job security and other social benefits like provident fund, group insurance, and pension plans for retirement.
• They enjoy better living conditions, which might include help with housing, transport, or facilities like canteens.
• The company provides timely training and helps them develop new skills.

🎯 Exam Tip: For questions about employee benefits, list specific examples related to fair treatment, security, growth, and welfare amenities.

Question 4. Enumerate the points relating to why business units are Socially Responsible?
Answer: Business units are socially responsible for the following key reasons:
1. Protection of Stakeholders' Interest: They protect the interests of all groups connected to the business, like customers, employees, and suppliers.
2. Promotion of Society: Businesses contribute to the overall well-being and development of society.
3. Assessment of Social Impact: They evaluate how their operations affect society and try to make a positive difference.
In simple words: Businesses are socially responsible to protect everyone involved, help society grow, and check their impact on the community.

🎯 Exam Tip: When listing reasons for social responsibility, remember to include a diverse set of beneficiaries, such as stakeholders and society at large.

Question 5. List the kinds of Social Responsibility.
Answer: Social responsibility can be divided into four main types:

• Economic Responsibility: This is the primary duty of a business to produce goods and services society needs and sell them for a profit. Businesses are created to be economic units first.
• Legal Responsibility: Every business must follow the laws of the land. Since laws are made for the good of society, a law-abiding business is also being socially responsible.
• Ethical Responsibility: This involves the behavior that society expects from a business, even if it's not a legal requirement. For instance, respecting cultural feelings when advertising.
• Discretionary Responsibility: These are purely voluntary actions, such as donating to schools or helping people affected by disasters. These go beyond what is expected.

🎯 Exam Tip: Clearly differentiate between the four types, emphasizing the mandatory nature of economic and legal, and the voluntary nature of ethical and discretionary responsibilities.

IV. Long Answer Questions

Question 1. Explain in detail the concept and need for Social Responsibility?
Answer: The concept of social responsibility means that businesses have an obligation to act in ways that benefit society. There are many ways to define it, but generally, it refers to the idea that every business owner, who gains wealth from their business, should give back some of that benefit to the community. This is a voluntary choice, not a legal demand. Therefore, this giving back is considered a moral duty for businesses. Since this benefit is meant to help society, it is known as the social responsibility of business. Businesses thrive because society provides resources and customers, so giving back is a way to maintain this healthy relationship.

Need:
1. Self-Interest: A business can only survive and grow for a long time if it accepts certain social duties. Business people usually realize that they can do better by meeting the needs and hopes of society.
2. Creation of Society: Business itself is a creation of society, and it uses resources from society. This means businesses have a duty to fulfill their obligations to society in return.
3. Social Power: Business people have a lot of social power. Their decisions greatly affect the lives and future of society, for example, in terms of jobs and income. With such power comes great responsibility.
4. Image in the Society: A business can improve how the public sees it by taking on social duties. Having good relationships with its workers, customers, and suppliers really helps the business succeed. A positive image makes a business more trustworthy and attractive.
In simple words: Social responsibility is when businesses willingly give back to society, recognizing it's a moral duty. It's needed because it helps businesses last longer, they use society's resources, they have social power, and it improves their public image.

🎯 Exam Tip: For a detailed explanation, define the concept first, then provide a structured list of reasons for its necessity. Use clear headings for each part (Concept, Need) to ensure all aspects of the question are addressed.

Question 2. Illustrate with examples the arguments for Social Responsibility?
Answer: There are several strong reasons why businesses should be socially responsible:

Protection of Stakeholders' Interest: A business is made up of many groups with different interests, like shareholders, customers, employees, and suppliers. A socially responsible business should work for the good of all these groups, not just for the benefit of its owners. For instance, paying fair wages to employees is protecting their interest.

Promotion of Society: Business is a part of society and relies on society for resources and support. Acting responsibly is vital to keep this relationship strong. As a business operates, its actions deeply influence society's values and interests. Businesses must meet social obligations as a way to balance any negative effects their operations might have on society. For example, a factory reducing its pollution helps the whole community.

Organized Social Power: Large companies gain a lot of social power through their many activities. If this power isn't used responsibly, it can be misused. There needs to be a balance between the power a business holds and its social responsibilities. For example, a company with significant market power should ensure fair pricing and not exploit consumers.

Legitimacy: It is smart for businesses to take on social responsibility because it helps them be seen as legitimate and boosts their economic goals. By improving social life, businesses can get better customers, happier employees, and supportive neighbors. Social responsibility helps build good citizenship, which is good for business. For example, sponsoring local community events makes a business a valued part of the area.

Competence: Business organizations and their managers have proven they are good at solving economic problems. Society expects them to use their skills to also solve social problems and act as leaders in that area. For instance, a tech company might develop software to help with education.

Professional Conduct: Professional managers are expected to be very aware of social issues and serve society. Social responsibility is a key part of their professional duties. They follow a code of conduct and ethics related to their work. For example, a manager ensuring workplace safety follows professional conduct.

Public Opinion: Becoming socially responsible helps improve how the public views a business. A good public image is very valuable for a business. For example, maintaining public parks, improving traffic areas, or organizing public awareness campaigns (like for health or environment) can greatly enhance a company's image.
In simple words: Arguments for social responsibility include protecting all groups linked to the business, helping society grow, balancing business power, gaining public trust, using business skills for social good, and improving public image through ethical conduct.

🎯 Exam Tip: When providing arguments, ensure each point is distinct and includes a clear, simple example to illustrate the concept effectively. This shows a deeper understanding.

Question 3. What are the arguments against Social Responsibility?
Answer: Critics argue against social responsibility for several reasons:

Lack of Conceptual Clarity: The idea of social responsibility is often unclear and can be understood in different ways. There isn't a general agreement on what it truly means or how far it extends. Because of this confusion, accepting social responsibility can be risky and not very helpful.

Dilution of Economic Goals: If businesses accept social responsibility, they might have to compromise on their main economic goals. A business is primarily an economic organization, and its main job is to make the highest possible profits for its owners. Taking on other responsibilities could put its financial health at risk.

Lack of Social Skill: Business organizations and their managers usually don't have experience in dealing with social issues. There are special organizations, like government bodies or non-governmental groups, that are better equipped to handle social problems. Businesses should stick to what they know best.

The Burden on Consumers: If a business starts to deal with social problems, the cost of running the business will go up. These higher costs will either be passed on to consumers as higher prices for goods and services, or they will have to be covered by the owners. This might be seen as taxation without representation, where consumers pay for social causes without a say.

Responsibility without Power: Businesses only have economic power, not social power. It is not fair to give them social responsibilities if they don't have the specific social power needed to tackle those issues effectively. If businesses are allowed to interfere in social matters, they might push their own values, which could harm society.

Misuse of Responsibilities: Accepting social responsibilities could mean that valuable managerial time and talent are diverted to social programs instead of core business activities. This could lead to a waste of important corporate resources.

Lack of Yardstick: Profitability is the usual way businesses measure success and make decisions. Adding social responsibility into this process makes decision-making much more complicated and can cause disagreements because there's no clear way to measure social impact.

Improper Role: The correct role of a business is to use its resources and energy efficiently to make the best possible profit within legal and ethical limits. Businesses should focus on their economic performance and leave social service to other organizations.

Overloading Responsibility: Business organizations already serve society by providing goods, creating jobs, developing technology, and paying taxes. It would be unfair to give them even more responsibilities.
In simple words: Arguments against social responsibility include its unclear definition, potential to hurt profits, lack of business expertise in social issues, increased costs for consumers, and the idea that businesses already do enough for society.

🎯 Exam Tip: When discussing arguments against social responsibility, remember to frame them from a business-centric perspective, focusing on profit, expertise, and operational efficiency concerns.

Question 4. Discuss the different groups that benefited from the Social Responsibility of business?
Answer: The question asks about the different groups that benefit from social responsibility. However, the provided answer lists arguments *against* social responsibility, not the groups that benefit. This seems to be a mismatch. I will provide a new answer that directly addresses the question about groups that benefit from social responsibility.

The different groups that benefit from a business's social responsibility include:
1. Consumers: Businesses provide good quality products at reasonable prices, ensuring customer safety and honest advertising. This makes consumers happy and builds trust.
2. Employees: Companies offer fair wages, good working conditions, opportunities for growth, and job security. This boosts employee morale and productivity.
3. Shareholders/Owners: While businesses invest in social causes, this often leads to a better public image, increased customer loyalty, and long-term sustainability, which ultimately benefits shareholders through stable profits and growth.
4. Community: Businesses engage in activities like environmental protection, charitable donations, and local development projects, which improve the quality of life for the entire community.
5. Government: Socially responsible businesses follow laws and regulations, pay taxes, and sometimes even help with public projects, reducing the burden on the government.
6. Environment: Through sustainable practices, waste reduction, and eco-friendly operations, businesses help protect natural resources and reduce pollution for everyone.
In simple words: Social responsibility helps many groups like customers (fair prices, safe products), employees (good pay, security), owners (long-term profits), the community (charity, development), government (following laws), and the environment (sustainable practices).

🎯 Exam Tip: For questions asking about beneficiaries, ensure you list specific groups and for each group, explain *how* they benefit from the business's socially responsible actions.

Question 5. How do you classify Social Responsibility?
Answer: Social responsibility of a business can generally be divided into four main categories:

Economic Responsibility:
Businesses exist primarily as economic units. Their first social responsibility is economic, which means producing goods and services that society needs and selling them for a profit. This includes economic activities such as production, distribution, and making a profit that society wants.

Legal Responsibility:
Every business has a duty to operate within the laws of the country. Since these laws are made to benefit society, a business that follows them is also being socially responsible. Obeying the law is a fundamental requirement for any business.

Ethical Responsibility:
This category involves the expected behavior of the firm according to society's standards, even if these behaviors are not formally written into law. For example, a business shows ethical responsibility by respecting people's religious feelings and dignity when advertising a product. This aspect often includes a voluntary element.

Discretionary Responsibility:
This refers to obligations that a business takes on purely voluntarily, going beyond what is expected. Examples include giving donations to educational institutions or providing help to people affected by natural disasters like floods or earthquakes. It also involves the company's management safeguarding capital investments by avoiding risky activities and only undertaking healthy business ventures that provide good returns.
In simple words: Social responsibility is classified into four types: economic (making and selling goods for profit), legal (obeying laws), ethical (doing what society expects, even without laws), and discretionary (voluntary good deeds like donations).

🎯 Exam Tip: When classifying social responsibility, clearly distinguish between economic and legal (often mandatory) responsibilities versus ethical and discretionary (often voluntary) responsibilities.

I. Choose the Correct Answer

Question 1. Management of business enterprises is being
(a) Professionalism
(b) Law and order
(c) Free enterprise
(d) Public awareness
Answer: (a) Professionalism
In simple words: Running a business today requires professional skills and knowledge, meaning it's managed by experts in a structured way.

🎯 Exam Tip: Professionalism in business management implies specialized skills, ethical conduct, and a structured approach to operations, essential for modern enterprises.

Question 2. Ethics are moral principles and values which ..........
a) guide a firm's behaviour
b) govern the actions of an individual
c) provide employees with rules on how to behave
d) are legally enforceable.
Answer: (b) govern the actions of an individual
In simple words: Ethics are like a set of rules about what is right and wrong that help guide how a person acts.

🎯 Exam Tip: Remember that ethics primarily deal with individual moral conduct and decision-making, though these principles often extend to guide an organization's behavior as well.

Question 3. The management today is usually sensitive to issues of social responsibility and ethical behaviour because of ..........
a) Interest Groups
b) Legal and governmental concerns
c) Medical coverage
d) All of the options
Answer: (b) Legal and governmental concerns
In simple words: Modern business leaders care about social duties and ethical actions mainly because of government laws and rules they must follow.

🎯 Exam Tip: While public opinion and interest groups are important, legal and governmental concerns provide a more direct and enforceable reason for businesses to adopt social responsibility and ethical behavior.

Question 4. Business ethics deals primarily with ..........
a) social responsibility
b) the pricing of products and services
c) moral obligation
d) being unfair to the competition
Answer: (c) moral obligation
In simple words: Business ethics mostly deals with the moral duties and responsibilities that a business has towards others. It's about doing the right thing.

🎯 Exam Tip: Business ethics is foundational to all other aspects like social responsibility and fair pricing, as it establishes the core moral framework for operations.

Question 5. The factors causing ethical behaviour in business are ..........
a) Government Law
b) Government Policies
c) Public Awareness
d) All of the options
Answer: (d) All of the options
In simple words: Government laws and policies, along with how much the public knows and cares about issues, all make businesses act in ethical ways.

🎯 Exam Tip: Ethical behavior in business is influenced by a combination of external pressures (laws, policies) and societal expectations (public awareness).

Question 6. The word Ethics is derived from the Greek word ..........
a) ethos
b) eccos
c) ethicos
d) ehos
Answer: (a) ethos
In simple words: The word 'ethics' comes from the old Greek word 'ethos'. This word originally meant 'character' or 'custom'.

🎯 Exam Tip: Remembering the origin of key terms can sometimes help in understanding their core meaning and historical context.

II. Very Short Answer Questions

Question 1. What is Legal responsibility?
Answer: Every business needs to follow the laws of the country. These laws are made to help society. So, a business that follows all laws is also being socially responsible. Following legal duties builds trust with customers and the community.
In simple words: Businesses must obey the law. Following laws means being socially responsible.

🎯 Exam Tip: Focus on keywords like "operate within the laws" and "law-abiding enterprise" to define legal responsibility clearly.

III. Short Answer Questions

Question 1. Define Social Responsibility:
Answer: According to Peter F. Drucker, social responsibility means that managers should think about if their actions will help the community. They should also consider if their actions support society's core values and help keep things stable and peaceful. This definition highlights that social responsibility is not just about profit, but about the broader impact a business has.
In simple words: Peter F. Drucker said that social responsibility means leaders must ensure their actions benefit the public good and strengthen society.

🎯 Exam Tip: When defining concepts from quotes, accurately reproduce the quote or paraphrase it carefully while giving credit to the source.

Question 2. What are all the facilities that should be provided to the customers?
Answer:
• Products and services must meet what customers need.
• The quality of products and services should be high.
• Goods and services must be supplied regularly without delay. Making sure customers have a reliable supply builds trust.
In simple words: Businesses should give customers good quality products that they need. They also need to provide these products regularly.

🎯 Exam Tip: List at least three key facilities, ensuring to cover both product quality and availability, as these are crucial for customer satisfaction.

IV. Long Answer Questions

Question 1. Explain Corporate Social Responsibility in India with an example:
Answer: The Tata Group is a great example of corporate social responsibility in India. This big company runs many projects focused on helping communities and reducing poverty. They support women's empowerment through self-help groups, create ways for people to earn money, develop rural areas, and run other welfare programs. In education, the Tata Group gives scholarships and money to many schools and colleges. Their long-standing commitment shows how businesses can create a positive impact beyond just making profits.
In simple words: The Tata Group is a good example of how companies help society in India. They work on projects like helping communities, reducing poverty, empowering women, and giving scholarships for education.

🎯 Exam Tip: When giving examples, name a specific company and describe at least three distinct types of social initiatives they undertake to illustrate their CSR efforts.