To win their cooperation by creating good human relations. (ii) Rehabilitating the population displaced by the operation of the business, if any. Society in general. The specific responsibilities of business towards society are discussed below :- IMPROVEMENT OF LOCAL ENVIRONMENT: A good organization develops the well-being surroundings for its workers and the general public. Deducting tax at source (e.g., from salaries) represents a drafting of the firm into service of the Central Board of Revenue. N.R. To protect the interests of the shareholders and employees, “the primary business of a business is to stay in business”. The fundamental essence of the existence of corporate social responsibility is for corporations to fulfill a sense of obligation towards the society, thus, balancing the social, environmental, and economic aspects of the business. 2. An organization is thus bound to safeguard the interests of such people who are its owners. ‘TATAS’ have been the first to enforce certain laws in favour of employees. The Iron Law of Responsibility: The institution of business exists only because it performs invaluable services for society. To protect the natural environment and avoid bad, effluent, smoky chimneys, dirty working conditions. Business depends on society for inputs like money, men, and skills and also for … 4. (vi) Industrial Aid to Education in Urban Areas: Progressive individual businessmen and individual business houses (such as Birlas, Tatas, Modis, Ruias, Lalbhais, Shreerams and others) are running and supporting schools, colleges and technical/professional educational institutions. “Management should create such a work environment that the workers are not obliged to use their weapon.”. It will participate in the public life of the country in helping to make policies, fair legislation and working on advisory bodies; vii. Obligation of Business Enterprise to Shareholders: As the company pervades almost all business activities, its shareholders who provide the necessary funds have certain expectations. Health is another field in which business firms are uniquely convenient agents. Today business has crossed national frontiers and assumed international dimension and, therefore, international feelings should be respected. To promote communal harmony and peace in the society. It shall not result in the formation of islands of affluence or comfort in the midst of poverty and suffering at the expense of society. the consumers, employees, shareholders, society, government, media and so on. There is hardly anything that is not adulterated. The business owes great responsibility to the community in various directions. To avoid being misled by wrong claims about products through improper advertisements or otherwise, the consumer should be provided full information about the products including their adverse effects, risks and care to be taken while using the products. Social Responsibility of Business towards Society, Shareholders, Employees and Consumers, Society – To Shareholders, Employees, Consumers and Community, Society – Owners/Investors, Employees, Consumers, Government, Community and World Public in General, Society – Consumers/Customers, Employees, Shareholders/Stockholders, Inter-Business, State and Community, 3. (vi) To make goods available to the consumers at the nearest point. Adultera­tion, poor quality, failure to give full measure, lack of service and courtesy to the customer, misleading or dishonest advertising, are all examples of violation by business enterprise of its obligation to the consumers of its products. So, in addition to giving a fair return on the capital invested and risk taken, the company should supply to its shareholders continuous, comprehensive and accurate reports giving full information about its working. He should bury the dead and turn to building of a better world in which there will be no profits except the earned profits that come from real service and-no privilege of participation in the upward march of human life. Everything you need to know about the social responsibility of business towards different sections of society. Every enterprise, are either in private or the public sector should make efforts to improve the conditions of the public of the surrounding areas, should arrange employment for unemployed and should help the … (ii) To bring out reality in advertisement. To provide opportunities for participation of shareholders in policy decisions. 5. No business should directly or indirectly indulge in profiteering, hoarding or creating artificial scarcity. This aspect has to be particularly taken note of by public sector enterprises. Opportunity for better career prospects; Regular supply of goods and services; Proper working conditions and … To recognize worker’s participation in decisions affecting their working life. Social responsibility indicates personal responsibility and obligation of managers and employees, as they act in their own interests, to ensure that rights and legitimate interests of others are in no way sacrificed or prejudiced by their behavi­our and actions. If the employees are satisfied the enterprise can achieve all round progress. (v) Improving the efficiency of the business operation. Businessmen should pay various taxes in time and help government in collecting funds. Discriminatory authority vested in government officials; c. Excessive political bias in the formulation of targets, policies and procedures without regard to basic economic laws; d. Loose, short-lived uncoordinated administrative structure; f. Frequent changes in laws and policies; g. Absence of integrated economy linking the private-public, large-medium, small and tiny sectors; h. Administrative delays and red-tapism and. Participation of workers in management is desirable but it can succeed only if workers are educated. The Social Responsibility of Business: The role of business in the society became a major aspect across business after Milton Freedman wrote the most provocative article in 1970. They can also distribute free medicines, nutritious food to school-going children and pregnant mothers, the aged and the sick. There should be a sense of participation between capital, on the one hand, and labour and skill, on the other, in their objective towards prosperity and progress. The development of human potentiality is so important that it is not wrong to say that “management is the development of people and not the direction of things”. (I) Responsibility towards the Shareholders or Owners: 1. A good businessman should adopt fair means to meet his rival’s competition. The management should encourage the establishment of Consumers’ Advisory Councils and Consumers’ Association should bring their complaints before these councils to be finally handled by the management. Destructive competition is always harmful, as it destroys confidence in business and introduces chaos instead of order and discipline. Corporate social responsibility (CSR) expresses a fundamental morality in the way a company behaves toward society. (V) Responsibility towards the Community: 1. Buying capacity and consumer preferences should be taken into consideration while deciding the manufacturing policies. But adulteration of goods, poor quality, failure to give fair measure, lack of service and courtesy to the customer, misleading and dishonest advertising, are all examples of violation of its obligations by a business enterprise towards the consumers. Business houses should set up units at those places where sufficient space is available for housing colonies of workers. Responsibilities of Business towards Society . Workers 6. Business depends on society for inputs like money, men, and skills and also for market where products have to be sold to the customers. It may, however, be pointed out that the expenditure on labour welfare, etc., should have relevance to the financial position of the company and the economic conditions of the nation. Social Responsibility of Business towards Society: There are various interest groups in the society which may affect the functioning of a business organisation. (i) Taking appropriate steps to prevent environmental pollution and to preserve the ecological balance. Distribution system should make goods easily available to avoid artificial scarcities and after sales service should be prompt. In some cases, they help by lending the services of their specialists (as visiting experts) and giving financial help. Prohibited Content 3. The problems responsible for ill-health in the rural areas need solution, for they result from no proper health education, unhealthy environment, unclean habits of living, poverty, poor diet and the social culture. (ii) To observe rules of international market. Now, we shall study the business environment. The demands for “social responsibility” have provoked enthusiastic discussion and debate on what new roles, if any, business firms should play in the social system. Consumers, 4. 2. It will sell his goods, commodities and services without adulteration at fair and reasonable prices and. Where certain monopolies are accepted as unavoidable or in public interest, the price of their toleration has to include the government’s right to impose any controls that may be needed to check undue monopoly power. Collective bargaining is another right of workers and strikes a sharp edged weapon. Disclaimer Consumer is not the king in our country but a vehicle used by businessmen for driving towards the goal of profit maximisation. (x) Contributing to the national effort to build up a better society. Privacy Policy Initially, such programmes may be labour-intensive in areas like carpentry, pottery, spinning, weaving, agro-based industry, farming, dairy farming, poultry and pig rearing, storage etc., so that increasing employment could be provided in rural areas. 6. Controlling in Management # Meaning, Definition, Types, Process, Steps and Techniques. A fair and reasonable return on the capital invested by them; ii. b. : a. This can be done by establishing a corporation and endowing it with capital out of earnings and savings. It will not purchase political support by unfair means; v. It will strive fairly and honestly to stimulate economic growth even by making reasonable sacrifices on occasions of national need; vi. regard to companies’ obligations towards all stakeholders, but to their obligations towards society. Arguments against social responsibility5. The social responsibilities of business and its economic activities are so intermingled that so far we have discussed the two together. 5. The consumers themselves have social responsibilities to their fellow-consumers. Scholarship and loans to undergraduate students; c. Contribution of material and equipments to educational institutions; d. Teaching aids for students and teachers and. The enterprise’s stakeholders take a great risk in trusting and invest in an organization. If, however, business firms fail to move voluntarily very far their traditional economic role to assume new responsibilities for social problems, social costs, and social benefits, the government should step in. Public demands on private business have expanded greatly in recent years. Healthy atmosphere to industrial peace. Most of these practices boil down to cheating and playing with the lives of people. Social responsibility denotes the responsibility of the business towards various sections of the society. g. Technological changes, rationalisation, modernisation, leading to false notions of mass employment among labour. Content Filtrations 6. To provide the shareholders with regular, accurate and full information about its working as well as schemes of future growth. 4. 3. (iii) Assisting in the overall development of the locality. At the same time shareholders shall also offer wholehearted support and co-operation to the company to protect their own interests. Business is continuously influenced by the environment. Unfortunately, both have failed to fulfill their reciprocal obligations because of the following causes: i. Economic-Political and Organisational Factors: b. Monopolism/groupism among all sectors; c. Business’s apathy to change for lack of time and unwillingness; d. Ideological and methodical conflicts and differences between different states; e. Existence of price-cutting, malpractices and unfair trade practices; f. Division of management and labour into two warring groups, one endeavouring to win over the other and. Corporate Social Responsibility of Business towards Society Various interest groups in the society by which a business operates may affect its functioning. Rehabilitating the population displaced by business units should also De part of responsibly of business? 5. Adequate reserves should be built up so that it will be able to declare a reasonable dividend during a lean period as well. Copyright. Business should render its responsibilities towards wholesalers, retailers and franchises. (v) To ensure safeguards of Human Rights. Narayana, Chairman of Infosys makes the idea of social responsibility of business quite clear when in a conference on corporate social responsibility he said, “Corporate’s foremost social responsibility is to create maximum shareholders’ value working in a way which is fair to all its stakeholders — workers, consumers, the community, government and the environment He further points out.” Consumers all over the world are, by and large, dissatisfied because the performance of businessman is far from satisfactory. Major responsibility of business towards different sections of society are as : 1. To handle the customer’s grievances promptly. To be able to discharge its social responsibilities an enterprise must work towards growth, expan­sion and stability. According to the socioeconomic model of corporate social responsibility, a business has a responsibility to promote and uphold the interest not only of its shareholders but also of its entire stakeholders—including customers, employees, suppliers, and the public. Therefore, business can play a major role by extending financial aid, by providing material and manpower support, home building practices etc. It is incumbent on business enterprise through its management to give all possible assistance in the improve­ment of education, training and upgrading of skills so that every member of the enterprise has a chance to grow. The depositors may deposit their savings in the savings account or fixed deposit accounts of the company. A business is a socio-economic institution which is responsible to various interest groups. The business enterprise must provide security with fair wages to its workers, and an equal opportunity for growth and development within the company. Management, as a part of its social responsibilities, is expected to provide for their social security, welfare, grievances settlement machinery and sharing of excess profits. Responsibilities towards Inter-Business, 6. Our mission is to liberate knowledge. (c) Smoothen the distribution system to make goods easily available. If a company fails to cope with changes in a changing and dynamic world, its position will be shaken, and the shareholders’ interests will be affected. more Understanding Market Orientation 4. To protect consumer rights and to make the business discharge its responsibilities to them, the consumers should give up their indifferent attitude and build up a strong consumer movement. To conclude, it is suggested that business firms should act on the facts of business. To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprise”. He alone gives employment. A manager should help the Government in the development of the country by observing these laws. The National Industrial Conference Board of America in its Report on ‘Industrial Aid to Education’ has suggested five different forms of educational aid which business can render to the community. Mental, physical, economic and cultural satisfaction of employees should be taken care of. Social responsibility of business refers to its obligation to make those decisions and perform those actions which are desirable in terms of the objectives and values of our society. Business organisations also hold a responsibility towards improvement of the quality of life the people in the community. It is needless to say that unfair competition enters with extortion, bribery, kick-backs and granting of discriminatory advertising allowances or brokerage fees and these should be avoided at all costs. It will pay its dues and taxes to the state fully and honestly; iii. To ensure regular and adequate supply of products. The circumstances leading to these actions or activities must be explained; c. Some evaluation of the performance must be conducted and. There should be a fair and wide spread distribution of goods and services among all the sections of consumers and community and. Reasonable legislation for protecting units of business against monopoly and. (x) Providing opportunity for promotion and development. Needless to say, to provide dividend, the company should earn sufficient profit. They should seek their profits in a truly scientific way, and use them for public good. Towards Bankers and Financial Institutions: Responsibilities towards bankers and financial institution include: (i) Providing correct data and information for project appraisal. The business generally interacts with owners, investors, employees, suppliers, customers, competitors, government and society. To ensure the safety of such investment. with emphasis on not only the economic concept of the profit-maximisation; but also with an orientation towards meeting social obligations. Government 8. Disclaimer 9. To ensure the safety of such investment. 6. (iii) Helping the government by establishing new industries. Political and economic security for investment through a stable government, good law and order situation and stable tax policies and fiscal measures; iv. Businessmen should comply with all legal requirements, execute government contracts, pay taxes honestly and in time, make services of executives available for government, suggest measures and send proposals to enact new laws for the business. To generate more employment opportunities. i. Employees form a reasoning and sensitive element of production. Economic Obligation – Since every business aims to earn profit, it is the responsibility of every business to generate surplus cash and use it towards further development or welfare of the society. Likewise, workers should realise their moral duty to do a good day’s job for a good day’s salary, to cooperate in increasing productivity, to come forward with suggestions and to participate in discharging their responsibility to the life of the plant and the community. Responsibility of Business Towards Different Interest Groups Major responsibility of business towards different sections of society are as : 1. Employees, 2. Let it be remembered, that every business individually and all businesses collectively to be profita­ble, must be organised to provide the greatest possible service to the masses of the population. The government has also some obligations towards business, such as to provide: i. Law and order ensuring safety of life, property and continuing business; v. A dynamic framework for rapid economic growth (infrastructure, legal aid); vii. a. TOS It refers to the obligation of business towards various social groups like employees, consumers, investors, government etc. (vii)To provide sufficient information about the products, including their adverse effects, risks, and care to be taken while using the products. Responsibility of business towards consumer extends to: Quality goods should be produced and supplied. A number of taxes are imposed on business for collecting revenue. Business should protect the environment which has acquired great importance all over the world. Copyright 10. Legislation is required to prevent deception and fraud being practiced on consumers, and where essential goods are in short supply, their fair distribution should be ensured. By producing goods and services efficiently and by fair means, business can contribute to the economic well-being of the community and its social uplift. This can be achieved by effective and profitable production. 4 To adopt fair dealings in foreign trade in order to maintain country’s image. The next obligation is to grow bigger and constantly to grow better through innovation. The sale of such goods must be followed by after sales service to ensure advice, guidance and maintenance; iv. 3. Society and Business are interdependent – There is a clear conviction within sections of the public that business has an obligation towards the society Better environment for business would be conducive for future success of the Organization Public Image: Socially responsible behavior creates a positive public image for Business. It is sometimes argued by economists as well as by business men accused of neglecting the public interest, that the business of business is just business. They shall not only offer wholehearted support and cooperation in the positive efforts of the company but shall also guide and control properly its policies and activities. The workers should be offered incentives for raising their performance. (vi) Contributing to research and development. Management must be guided by the socio-economic objectives of the society. Social and Economic Objectives of Business: The purpose of business enterprise is to produce quality goods and distribute them and do it ethically so as to serve the general welfare. In other words, the responsibility of business towards society are: Protection of environment. Moreover, internal accountability to consumers should be extended. It follows ethical behavior toward stakeholders and recognizes the spirit of the legal and regulatory environment. Appropriate steps should be taken to prevent environmental pollution and to preserve ecological balance. 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