CBSE Class 11 Business Studies Revision Notes Chapter 6

CBSE Class 11 Business Studies Revision Notes Chapter 6 – Social Responsibilities of Business

Chapter 6 of Social Responsibilities of Business and Business Ethics for Class 11 comprises how a business is supposed to navigate in terms of community, responsibility and the elements attached to it. The chapter further discusses topics such as Business Ethics, Environmental Protection by Businesses and Social Responsibilities.

Facts that Matter

Business Ethics

The goal of ethics is to establish what constitutes right and wrong behaviour in humans based on accepted social norms for that individual’s conduct or behaviour in a given field of endeavour.

Business ethics is the study of how organisational goals, practises and processes relate to societal welfare. It refers to the socially established moral standards that ought to govern corporate behaviour. Its objective should be to have employees in an organisation to work in a way that is socially acceptable. Companies which operate ethically are valuable since a company’s conduct affects its image and garners the trust of the public. 

Elements of Business Ethics

• Top Management Commitment: The top management plays an important role in driving the morally sound behaviour of the entire organisation. The CEOs and other top management personnel must provide ongoing leadership to uphold the values of the organisation. 
• Publication of a Code: A company or enterprise must outline the ethical standards, legal requirements for production, conflicts of interest, product safety and quality, and workplace health and safety requirements for employees.
• Establishment of Compliance Mechanism: In addition to establishing performance standards, an organisation must also create a system for assessing each employee’s actions to determine whether the ethical standards are being upheld.
• Employee Involvement at All Levels: Employee involvement at various levels is crucial for the effective implementation of ethical standards. This is so that the ethical code can actually be put into practice by the employees.
• Results Evaluation: Although it can be challenging to assess how well ethical standards have been implemented, top management should take action to ensure compliance. Additionally, it must take strong action to stop any unethical behaviour within the organisation.

Social Responsibility Towards Different Interest Groups

The term “social responsibility of business” refers to an organisation’s full ethical commitment to making decisions and acting in a way that will achieve the goals and foster the values of our society.

Businesses need to take social responsibility for the following:

Shareholders or Owners

When investors are pleased with the company they have invested in, they are more likely to invest additional funds in the project. The rising demand for the capital required for growth and expansion can be satisfied by content investors. A company must provide fair returns to all of its shareholders, provide accurate updates and information on crucial management issues, and continuously work to enhance both its operational effectiveness and financial standing.

Additionally, the business must give shareholders and investors the appropriate opportunity to participate in key corporate decisions. As a result, investors will make larger investments, which can then be used to more fully modernise, diversify and scale up existing activities.

Workers or Employees

Since workers or employees are the representatives of an organisation, the business must fulfil its social obligations to them. The motivation and working spirit within an organisation will increase if a company attends to the needs of its office staff or employees. A content and happy employee typically gives the organisation his or her best effort in the form of quality work, prompt output work collectively and would willingly contribute to raising production, sales and profit. 

The effectiveness and productivity of employees can be increased by providing a comfortable working environment and compensation that they deserve.

Consumers

A company’s sales and profits are directly correlated with the level of consumer-focused social responsibility. The end user’s or customer’s level of satisfaction directly affects a company’s ability to succeed and the likelihood of making money. 

A company can increase its customer base by offering higher-quality goods or services at reasonable prices. When the final consumers believe their purchases were worthwhile, they will be satisfied. Customers will remain loyal, and their retention will undoubtedly help the business grow and profit.

Government

In order for the business to operate or function properly, it must adhere to the laws and policies of the government. They may deal with various inquiries and investigations carried out by public service organisations if they demonstrate a careless disregard for social responsibility.

If the organisation does not abide by the laws and regulations established by the state or country, it could suffer severe losses. Compliance is therefore crucial in this regard.Examples of what a business can do to comply with the government:

• Acquiring a licence for the business.
• The business must request approval as needed.
• The company is required to pay taxes to the government on time.
• It must abide by the law with regards to labour, the environment and other matters.
• If the company respects and abides by the law, it can gain favour with the authorities. The government is then able to create new commercial policies that are advantageous to the company.

Community

A business has a duty to the community in terms of its location and operations. They must fulfil their social obligations to the neighbourhood for the smooth functioning of the organisation’s operations. 

Businesses need to ensure that their activities do not negatively impact the lives of the residents. If not, companies should make amends and compensate for their hardship or lessen the severity of it. Some of the community responsibilities that businesses must take on include the following points: 

• A company can be created to provide a service to the neighbourhood.
• For the sake of the local patients’ health, a health centre must be constructed.
• For the benefit of the local children, primary, secondary and a degree-granting colleges must be established.
• Employment agencies must be established in order to hire qualified and experienced personnel.
• Events must be planned by an organisation for a social cause.
• Building and maintaining facilities for people’s recreation and religious worship.

Business and Environmental Protection

The entirety of a person’s surroundings, including both natural and artificial ones, is referred to as their environment. These surroundings also contain resources that are beneficial to human life.

Resources include both natural and artificial things. Natural resources include things like land, water, air, flora and fauna, and raw materials. Artificial resources include things like cultural heritage, socioeconomic institutions and people.

However, the increased quantity of chemical and non-biodegradable wastes produced and the environment’s limited ability to absorb pollutants causes pollution. Pollution alters the physical, chemical and biological properties of air, land and water. A majority of hazardous compounds that are released into the environment are a result of industrial processes that produce toxic byproducts and other toxic substances.

Root Causes of Pollution

1. Air Pollution: It is mainly brought on by the manufacturing sector, which lets out smoke, other chemicals and carbon monoxide from moving vehicles. The thinning of the ozone layer due to pollution has resulted in global warming on the planet.
2. Water Pollution: Water pollution has caused the deaths of many animals and is a serious threat to human life.
3. Land Pollution: When hazardous waste is dumped on land, it becomes contaminated. As a result, the land loses quality and is no longer suitable for farming or planting.
4. Noise Pollution: Not only is noise from factories and vehicles an annoyance, but it also poses significant health risks. Various illnesses, such as hearing loss, heart issues and mental illness can all be brought on by noise pollution.

Environment Protection and the Role of Business

• Dedication on the part of the company’s senior management to support an office culture that values environmental preservation and pollution prevention.
• Ensuring that the company’s commitment to environmental protection is shared by all divisions and employees.
• Establishing clear policies and programmes for acquiring top-notch raw materials, utilising cutting-edge technology, putting scientific waste disposal and treatment procedures to use, and enhancing employee competencies in order to lessen pollution.
• Obeying the laws and guidelines set forth by the government to prevent pollution.
• Taking part in government initiatives to plant trees, manage dangerous substances, clean up dirty waterways and prevent deforestation.
• Periodic cost-benefit analyses of pollution control programmes are necessary to strengthen environmental protection efforts.
• To involve suppliers, dealers and customers in pollution control programmes, educational workshops and training materials are put together to share technical expertise.