Attempt the following.
1) What is the social responsibility of commercial organizations? towards consumers?
Ans: Social responsibility of the commercial organizations. Towards consumers are as follows:
1) Good Quality Products:
The organization should produce quality goods. Every organization should have its quality control department so inferior and substandard products can be rejected. International Standard Organization (ISO), is the latest trend towards quality control. This ensures customers about quality products.
2) Fair Prices:
The consumers should not be cheated by charging high prices. It is not possible to fool the customer at all the time. Fair price converts a one-time consumer into a permanent consumer. Maximum Retail Price (M.R.P.) inclusive of all taxes should be printed on every packet. The retailer should not charge any extra amount.
3) Customer’s Safety:
The business must ensure that the product supplied will not adversely affect the life and health of the customers. Unsafe products should not be marketed. The consumer should be warned of any unsafe goods.
4) Honest Advertising:
The consumers want to know the facts, features, advantages, side-effects, etc. of the products. The advertisement conveys this information. So the organization must be sure that the advertisement is not being misleading. The false, misleading, and vulgar advertisement should be avoided. Consumers will appreciate only honest advertisements in the long run.
5) After Sales Service:
The organization is expected to provide after-sales service for the maintenance of goods during the period of warranty. Efficient and effective after-sale service helps to establish a good relationship between the consumers and the organization.
6) Research and Development:
Organization should conduct research and development to improve the quality of goods and to reduce the cost of production. This will minimize the final prices charged to consumers. It must provide quality standards such as BIS or AGMARK on respective products.
7) Regular Supply:
Consumers should be supplied with the goods regularly as and when required by them. The commercial organization should not create an artificial shortage of goods by hoarding and black marketing.
8) Attend Complaints:
Consumer complaints must be attended immediately. A quick and effective grievances redressal system should be implemented. Suggestions for customers should be welcomed.
The business organization should arrange training for their consumers either free or by charging reasonable fees.
Avoid Customer Exploitation:
The business should avoid unfair trade practices which lead to exploitation of consumers. Also, they should avoid monopolistic competition in the interest of consumers.
2) State different types of responsibilities towards society.
Ans: A business organization has certain responsibilities towards the society at a large they are as under
1) Protection of the environment:
Pollution is the major problem of present times. Air pollution and water pollution are due to industries, chemical plants, cement plants, etc. The business organization should take all possible measures to minimize pollution.
2) Better and Maximum Use of Resources:
The business organization should make proper and optimum use of scarce resources. The resources like fuel, water, land, etc. must be used efficiently.
Reservation for Weaker Section: The organization is expected to reserve certain positions in their establishment for economically weaker sections of the society to lift up the economically weaker section of the society. These people expect financial and other help from the business unit; which will be provided time to time.
3) Development of Backward Regions:
The society requires that the business organization should be started in backward areas. This will create employment opportunities and increase purchasing power among the rural people. Thereby, helping backward regions to develop.
4) Protest against Anti-Social Activities:
Business organizations should not participate in anti-social activities. It will adversely affect society. No financial help should be provided for that. Smuggling, association with underworld people, bribing government people should be avoided.
5) Financial Assistance:
Society expects donations and financial assistance for various social causes such as eradication of poverty, illiteracy, etc. They expect the business organizations to provide financial assistance to various awareness programs such as anti-drug campaigns, antinomies pollution campaigns, etc.
6) Prevent Congestions:
The business should avoid the congestion of industries in cities by spreading industries in different places or locations. Industries should be preferably located in industrial zones only. It will avoid adverse effects on residential areas.
7) Employment Generation:
The business should provide large employment opportunities for all sections of society. It can be done through expansion and diversification programs. Such an effort will help to solve the problem of unemployment, poverty in society.
3) Describe the responsibilities of commercial organisation towards the Investors?
Ans: Responsibilities Towards Investors: Investors provide finance to the company. They are creditors of the business. Businesses should fulfill the following responsibilities towards investors.
1) Proper Conduct of Meetings:
The company should call meetings of investors and provide information about the business. Proper notices of the meeting should be sent to them. In a period of crisis, investors should be taken into confidence. Factors responsible for failure should be known to the investor.
2) Return on Investment:
Investors invest their money in business and accept risk factors. They should get fair returns on investment regularly in the form of interest. The following points should be considered
a. Fair returns on investment
b. Safety of investment.
c. Steady appreciation of business.
3) Handling Grievances:
A company should handle investor’s grievances if any. There should be an effective methodology for this. All queries regarding any other issue must be answered in a satisfactory way.
4) Maintain Transparency:
Investors provide long term capital as well as working capital to run the business efficiently. So it should maintain a high degree of transparency in its operation.
5) Proper Disclosure of Information:
Management should present full and factual information to investors. They should get regular reports, circulars, and statements of profit. The financial performance of the company must be provided correctly so that prospective investors can make the right decisions to invest in the future. All of this will ensure that their investment is safe.
6) Maintain Solvency and Prestige:
Businesses should maintain a sound financial position, solvency, prestige, and goodwill to satisfy investors. Businesses should make continuous efforts for research, innovation, and expansion programmes..
4) Describe the features of Business Ethics.
Ans. The features of Business Ethics are explained as below :
1) Code of conduct : Business ethics is a code of conduct developed and evolved for regulating business activities toward welfare of society. It explains what activities one is suppose to do and not do for the welfare of the society. All business units must follows this code of conduct.
2) Based on moral and social values : Business ethics comprises social and moral principles i.e. rules for carrying out business activities smoothly. This contains self control, consumer protection and welfare, fair treatment to social group, service to society, not to harm (exploit) others, etc.
3) Gives protection to social groups : Business ethics protects the interests of all the constituents (groups) of the society which include consumers, creditors, employees, small businessmen, shareholders, government, etc.
4) Provides basic framework : Business ethics specifies the social, cultural, legal, economic and other limits of business within which business units are expected to plan, work out and conduct their functions and activities.
5) Voluntary : The businessmen must follow (accept) business ethics voluntarily, i.e. on their own. Business ethics must be similar to self-discipline. It should not be made compulsory by law.
6) Requires education and guidance : Prior to introduction of business ethics in the organisation, businessmen must be properly educated, trained and given guidance. The businessmen must be convinced and motivated to implement business ethics.
7) Relative term : Business ethics is a relative term. It differs or changes from one business to another business and from one country to another. In one country whatever is considered good may be banned or bad for other country.
8) New concept : Business ethics is considered as newer concept. It is strictly followed and applied in developed, i.e. advanced countries. It is not accepted and followed in developing and poor (backward) countries.
5) What is Corporate Social Responsibility ?
Ans.1) Corporate Social Responsibility (CSR) is the recent and newest management strategy which creates positive impact on society while doing business. It is a global concept. It is self regulating business model which aims at contributing towards social welfare and support ethically oriented practices. CSR makes a company socially accountable and responsible. CSR makes a company accountable towards itself, its stakeholders, public in general, etc. By undertaking and practising social responsibility company can be alert and awake about social, economic and environmental aspects of the society.
2) According to UNIDO (United Nations Industrial Development Organization), “Corporate Social Responsibility is a management concept whereby companies integrate social and environ-mental concerns in their business operations and interactions with their stakeholders”. According to Section 135 of the Companies Act, 2013 and Companies (CSR Policy) Rules 2014, the companies having net worth of 1500 Cr. or more or turnover of 1000 Cr. or more; or net profit of 15 Cr. or more during any financial year have to form a Corporate Social Responsibility Committee of the Board. The Board’s report will give information about the compositions of CSR committee with effect from 1st April, 2014.
3) In every financial year, all companies should spend at least 2% of average net profits of last 3 years on their CSR policy. The CSR committee consists of 4 directors who meet at least 2 times in a year to discuss and review the CSR policy and CSR activities, prepare budget, explain the way to implement projects and to establish a transparent means to check progress.
4) CSR, supports the following activities :
(i) Eradicating hunger, poverty & malnutrition, promoting preventive health care & sanitation & making available safe drinking water.
(ii) Promoting education, including special education & employment enhancing vocation skills especially among children, women, elderly & the differently abled & livelihood enhancement projects.
(iii) Reducing child mortality and improving maternal health by providing good hospital facilities and low cost medicines.
(iv) Ensuring environmental sustainability, ecological balance, protection of flora & fauna. animal welfare, agro forestry, conservation of natural resources & maintaining quality of soil, air & water.
(v) Employment enhancing vocational skills, etc.
5) Penalties for non-compliance of CSR activities (duties) would attract a fine of not less than 50,000 which may increase to 25,00,000 and every officer of the company in default is given punishment of imprisonment for 3 years or with fine of 50,000 which may increase to 5,00.000 or with both.