Q.1. ‘Profit earning is not the only objective of the business’? Give any four reasons to justify the statement.
Ans. The sole aim of earning profit has the following effects on a business:
(a) Ignores the interest of workers: Labour is one of the most important factors of production. Profit maximization by-passes the interest of workers in the way that they do not get fair remuneration and hence are not motivated. In the absence of motivation, they will not work up to their full potential. Resultantly, quality and standards of the products and services will deteriorate and will ultimately lead to losses.
(b) Ignores the interest of customers: Customers are very important for every business in the sense that without their existence, even thinking about business is merely a dream. Profit maximization by-passes their interest because goods / services are overpriced which ultimately leads to reduction in the number of customers, reduction in quantity of sales and thereby reduction in profits.
(c) Ignores the interest of society: Profit maximization overlooks the interest of the society in which it works. It may propel a businessman to indulge in unfair trade practices like hoarding, black marketing etc.
(d) Ignores long-term interest of the business itself: Profit maximization may be the objective for the short term, but in the long term it may lead the business to a dangerous position where it could become very difficult for the business to even survive.
Q.2. Indian Oil Corporation has taken initiative in providing clean drinking water, running child and maternity health centers, construction of school buildings, libraries and providing financial help to deserving students from poor and needy family through scholarship.
(i) Why do you think IOC needs to take such initiatives?
(ii) Identify two values upheld by IOC by discharging such activities.
Ans. Indian Oil Corporation has taken initiative in providing clean drinking water, running child and maternity health centers, construction of school buildings, libraries and providing financial help to deserving students from poor and needy family through scholarship as it is fulfilling its social responsibilities like:
(i) To play a fair role in civic affairs.
(ii) To provide and promote general amenities and help in creating better living conditions in general.
(iii) To preserve and promote social and culture values.
(iv) To undertake socially desirable projects relevant for the community as a whole.
(v) To take steps for developing backward areas.
Two values upheld by IOC by discharging such activities
(i) Maintenance of society.
(ii) Holding business responsible for social problems.
Q.3. What are the responsibilities of business towards its shareholders (investors) and creditors?
Ans. The responsibilities of business towards shareholders (investors) and creditors are as follows:
(i) To ensure safety of investment.
(ii) To provide a fair and regular dividend or interest.
(iii) Growth of the business should be planned.
(iv) There must be effective communication.
(v) It must utilize resources properly.
(vi) To offer reasonable opportunity for participation of shareholders in policy decisions.
Q.4. What are the responsibilities of business towards its employees?
Ans. The responsibilities of a business towards employees are as follows:
(i) To provide them fair wages and full employment.
(ii) They should be provided good working conditions.
(iii) They should be provided suitable opportunities of advancement.
(iv) There must be security of service and job satisfaction.
(v) To develop a sense of belonging and dignity of labour.
Q.5. What are the responsibilities of business towards the society (public) ?
Ans. Business and Society/Public: Business should work for the economic and social well-being of the community. The responsibilities of business towards the society are as follows:
(i) Maximum utilization of natural resources.
(ii) To provide maximum employment opportunities.
(iii) To preserve social and cultural values.
(iv) To uplift weaker section of the society.
(v) Work towards the upliftment of democratic institutions and national integration.
(vi) To provide assistance to hospitals, educational institutions, etc.
(vii) To protect the environment from all types of pollution.
(viii) To pay taxes honestly and regularly.
Q.6. What are the responsibilities of business towards its fellow businessmen and suppliers?
(a) Responsibilities towards fellow businessmen
(i) To deal fairly with them.
(ii) To co-operate with them.
(iii) To adopt healthy trade practices.
(iv) To protect and assist cottage industries.
(b) Responsibilities towards suppliers
(i) It should be impartial and courteous.
(ii) To make fair and regular payments to suppliers.
(iii) To adopt fair trade practices.
(iv) To cooperate with the suppliers.
Q.7. Explain any four responsibilities of business towards community.
Ans. The responsibilities of business towards community are as follows:
(i) To adopt socially desirable behaviour and standard of living, avoiding ostentation and wasteful expenditure.
(ii) To play a fair role in civic affairs.
(iii) To provide and promote general amenities and help in creating better living conditions in general.
(iv) To preserve and promote social and culture values.
(v) To undertake socially desirable projects relevant for the community as a whole.
(vi) To take steps for developing backward areas.
Q.8. Mention steps taken by the business to adopt fair trade practices.
Ans. Following steps can be taken by the business to do fair trade practices:
(i) Use of standard weights and measures.
(ii) Payment of reasonable and fair remuneration to workers.
(iii) Not manufacturing and selling adulterated goods.
(iv) Production of good quality products.
(v) Earning reasonable and justifiable profits.
(vi) Complying by the laws of the land.
Q.9. Give any three points stating the need of social responsibilities.
(i) Social responsibility is required to serve the interest of different section of society.
Example: consumers, etc.
(ii) It gives the moral understanding to an entrepreneur about what is morally right or wrong.
(iii) It also helps in addressing ethical, legal, and commercial issues well.
Q.10. “Social Responsibilities create burden on consumers”. How?
Ans. Solution of the social problems and social issues often requires huge financial investment. In such circumstance, the businessmen are likely to shift the burden on customers instead of bearing it themselves.
Q.11. Explain the types of pollution.
Ans. Types of Pollution:
(i) Air Pollution: Air Pollution occurs when air contains harmful substances such as gases, fumes, dust and odour in harmful amount which causes damage to living organisms.
(ii) Water pollution: It may be defined as presence of chemicals, industrial waste and other contaminants in such amount that lowers the water quality, which is harmful to living organisms or impairs the beneficial use of water.
(iii) Land pollution: It is caused by dumping of toxic wastes on land which damages the quality of land, making it unfit for agriculture or plantation.
(iv) Noise Pollution: It may be defined as unpleasant, unwanted and disagreeable sounds which causes damage or harm to living organisms. It may be machines, factories, vehicles etc.
Q.12. Why is it said that environment is fast deteriorating particularly due to industrial activities?
Ans. It is widely recognized that the rapid industrialization is causing a great damage to the environment because of following factors:
(i) The smoke and other chemicals from manufacturing plants pollute the air and has created a hole in the ozone layer leading to dangerous warming of earth.
(ii) The business enterprises dump chemical and other solid wastes into rivers, streams, lakes, etc. posing a serious threat to aquatic and human life.
(iii) Dumping of toxic wastes by the industries on land has damaged the quality of land.
(iv) Noise caused by running of factories, manufacturing activities also creates noise pollution.
Q.13. Explain how pollution control measures will:
(i) Reduce risk of liability
(ii) Lead to cost savings.
(i) Reduce risk of liability: It is possible that an enterprise is held liable to pay compensation to its workers affected by the toxicity of gaseous, liquid and solid wastes it has released into the environment. Therefore, suitable pollution control devices should be installed to reduce such risk.
(ii) Lead to cost savings: Cost savings are particularly noticeable when improper production technology results in greater wastes, and increased operating cost of business like higher cost of waste disposal and cost of cleaning the plants. Such economic losses can be reduced by an effective control programme.
Q.14. Explain the various elements of business ethics.
Ans. Elements of business ethics:
(i) Ethical thinking: The business must develop ethical imagination and thinking when it is taking decisions.
(ii) Ethical ranking: The business must rank its decisions on the basis of ethics.
(iii) Tolerance of Ethical disagreement and ambiguity: Whenever a businessman takes ethical decisions, there may be some opposition. The businessman must accept this opposition in a healthy manner.
(iv) Ethical Management: The businessman must assess ethical competence of managers along with their managerial ability.
Q.15. Enlist any four measures through which a business can promote its goodwill in the market?
Ans. A business can promote its goodwill in the market by adopting following measures:
(i) Enlisting its shares in the market.
(ii) Manufacturing the best quality goods.
(iii) Providing efficient after sale services.
(iv) Making provisions for the redressal of consumer grievances.
Q.16. What do you understand by social responsibility of business? How is it different from legal responsibility?
Ans. Social responsibility of business refers to its obligation to take those decisions and perform those actions which are desirable in terms of the objectives and values of our society. Social responsibility is broader than legal responsibility of business. Legal responsibility may be fulfilled by mere compliance with the law whereas Social responsibility is a firm’s recognition of social obligations even though not covered by law, along with the obligations laid down by law. In other words, social responsibility involves an element of voluntary action on the part of business people for the benefit of society.
Q.17. What is environment? What is environmental pollution?
Ans. The environment is defined as the totality of man’s surroundings - both natural and man-made. Environmental Pollution is injection of harmful substances into the environment. It is result of industrialization. Pollution changes the physical, chemical and biological characteristics of air, land and water. Pollution harms human life and the life of other species. It also degrades living conditions while wasting or depleting raw material resources.
Q.18. What is business ethics? Mention the basic elements of business ethics?
Ans. Business ethics refer to the values and principles that govern the behaviour of individuals in an organisation such that the business activities are desirable from the viewpoint of society.
Elements of business ethics are
(i) Top management commitment
(ii) Publication of a ‘Code’
(iii) Establishment of compliance mechanism
(iv) Involvement of employees at all levels
(v) Measurement of results
Q.19. State the meaning of corporate social responsibility as per the Companies Act 2013.
Ans. As per Companies Act 2013, the concept of CSR rests on the ideology of give and take. Companies take resources in the form of raw materials, human resources, etc. from the society. By performing the task of CSR activities, the companies are giving something back to the society.