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The NCERT Class 11 Business Studies Chapter 6 discusses the concept, need, arguments for and against, kinds, and specific responsibilities of business towards society. It covers social responsibility towards owners, workers, consumers, government, and community, along with the business role in environmental protection and pollution control. The chapter also explains business ethics, its elements, and Corporate Social Responsibility under the Companies Act 2013. These solutions provide clear, concise, and CBSE-aligned answers for effective exam preparation. You can also download the free PDF for revision.
Explore Notes of Class 11: Business Studies
NCERT Solutions Class 11 Business Studies Chapter 6: Social Responsibilities of Business and Business Ethics
This section provides detailed and student-friendly answers for the Class 11 Business Studies Chapter 6 exercise questions. Each answer is explained clearly to strengthen understanding and exam preparation.
Exercise
Short Answer Questions:
1. What do you understand by the social responsibility of business? How is it different from legal responsibility?
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. It involves respecting the aspirations of society and contributing to their achievement along with profit interests. It is broader than legal responsibility and includes voluntary actions for society’s benefit.
Legal responsibility is fulfilled by mere compliance with the law, whereas social responsibility involves voluntary actions beyond what is required by law. For example, legal responsibility might mean following minimum wage laws, but social responsibility could include providing better working conditions voluntarily.
2. What is the environment? What is environmental pollution?
The environment is defined as the totality of man’s surroundings, both natural and man-made. These surroundings are in the nature of resources useful for human life, including natural resources like land, water, air, fauna, flora, and raw materials, or man-made resources such as cultural heritage, socio-economic institutions, and people.
Environmental pollution is the injection of harmful substances into the environment, changing the physical, chemical, and biological characteristics of air, land, and water. It harms human life, other species, degrades living conditions, wastes or depletes resources, and affects cultural heritage. Pollution occurs because the environment can absorb only a limited amount of pollutants and wastes.
3. What is business ethics? Mention the basic elements of business ethics.
Business ethics refers to the socially determined moral principles which should govern business activities. It concerns the relationship between business objectives, practices, and techniques and the good of society. Examples include charging fair prices, using fair weights, giving fair treatment to workers, and earning reasonable profits. Ethical behaviour improves public image, earns confidence, and leads to long-term success.
Basic elements of business ethics:
(i) Top management commitment: CEO and higher managers must lead and commit to ethical conduct and uphold organisational values.
(ii) Publication of a ‘Code’: Written document defining principles like honesty, adherence to laws, product safety, workplace health, and fairness in practices.
(iii) Establishment of compliance mechanisms: Ensure decisions comply with ethics in recruiting, training, audits, and reporting systems for unethical behaviour.
(iv) Involving employees at all levels: Employees implement policies; form groups to discuss and examine attitudes towards ethics.
(v) Measuring results: Audit compliance with standards and discuss results for further action.
4. Briefly explain (a) Air Pollution, (b) Water pollution, and (c) Land pollution.
(a) Air Pollution: It is the result of factors that lower air quality, mainly due to carbon monoxide from automobiles and smoke or chemicals from manufacturing plants. It creates a hole in the ozone layer, leading to dangerous global warming.
(b) Water Pollution: Water becomes polluted from chemical and waste dumping by business enterprises into rivers, streams, and lakes, often with little regard for consequences. It leads to the death of animals and poses serious threats to human life.
(c) Land Pollution: It is caused by dumping toxic wastes on land, damaging its quality and making it unfit for agriculture or plantation. Restoring damaged land is a significant problem.
5. What are the major areas of social responsibility of business?
The major areas of social responsibility of business are:
(i) Economic responsibility: Produce goods and services that society wants and sell them at a profit.
(ii) Legal responsibility: Operate within the laws of the land, as laws are for society’s good.
(iii) Ethical responsibility: Behaviour expected by society but not codified in law, such as respecting religious sentiments in advertising; it involves voluntary action.
(iv) Discretionary responsibility: Purely voluntary obligations, like charitable contributions to education or helping people during floods or earthquakes.
6. State the meaning of Corporate Social Responsibility as per the Companies Act 2013.
As per Section 135 of the Companies Act 2013, Corporate Social Responsibility (CSR) refers to the activities undertaken by a company as specified in Schedule VII of the Act, along with the expenditure thereon. It applies to companies with a net worth of Rs. 500 crore or more, turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more in the preceding financial year. These companies must spend at least 2% of their average net profits from the last three years on CSR initiatives like education, healthcare, and environmental sustainability.
Also Read: CBSE Class 10 Economics Chapter 2 NCERT Solutions
Long Answer Questions:
1. Build up arguments for and against social responsibilities.
Here we have stated the arguments for and against the social responsibilities of business.
Arguments for social responsibilities:
(i) Justification for existence and growth: Business exists to provide goods and services for human needs; profit is an outcome of service to society, ensuring prosperity through continuous service.
(ii) Long-term interest of the firm: Serving society gains maximum long-run profits; improves public image and maintains cooperation from workers, consumers, and government.
(iii) Avoidance of government regulation: Voluntary responsibilities reduce the need for laws that limit business freedom.
(iv) Maintenance of society: Prevents anti-social activities not covered by laws that could harm business interests.
(v) Availability of resources with business: Uses financial, human, and managerial resources to solve social problems effectively.
(vi) Converting problems into opportunities: Business can turn risky social situations into profitable deals.
(vii) Better environment for doing business: Fewer social problems provide a stable setting for success.
(viii) Holding businesses responsible for social problems: Business creates issues like pollution and discrimination; it has a moral obligation to solve them.
Arguments against social responsibilities:
(i) Violation of profit maximisation objective: Business exists solely for profit; social duties divert from this goal.
(ii) Burden on consumers: Costs of responsibilities like pollution control are passed to consumers via higher prices.
(iii) Lack of social skills: Businessmen lack training to handle social issues; these should be left to specialised agencies.
(iv) Lack of broad public support: The Public does not fully support business involvement in social programmes due to a lack of confidence.
2. Discuss the forces which are responsible for increasing concern of business enterprises toward social responsibility.
The forces increasing concern for social responsibility are:
(i) Threat of public regulation: Democratically elected governments act as welfare states; they regulate irresponsible businesses to protect public interest, forcing enterprises to be responsible.
(ii) Pressure of labour movement: Educated and organised labour has gained power, compelling businesses to focus on worker welfare instead of arbitrary policies.
(iii) Impact of consumer consciousness: Education, media, and competition make consumers aware of rights; they demand quality and fair treatment, following ‘the customer is king’.
(iv) Development of social standards for business: Business is seen as legitimate only if it serves social needs; it must align with society’s values to survive.
(v) Development of business education: Rich content on social responsibility makes consumers, investors, and employees more sensitive to social issues.
(vi) Relationship between social interest and business interest: Social and business interests are complementary; serving society ensures long-term business benefits.
(vii) Development of professional, managerial class: Professional managers balance multiple interests in society beyond just profits for successful operations.
3. ‘Business is essentially a social institution and not merely a profit-making activity’. Explain.
Business is a social institution because it operates within society, depends on it for resources, and must serve its needs. It is permitted by society to conduct activities and earn profits, but one must avoid harm, like pollution or exploitation. Socially responsible behaviour, such as providing quality goods and fair wages, enhances image and ensures long-term success. Profit is important but secondary to serving society, as a business justifies its existence through continuous service. In a democratic society, businesses must respect human rights and act responsibly, reconciling economic interests with social demands. Thus, business is socio-economic, fulfilling roles beyond mere profit.
4. Why do the enterprises need to adopt pollution control measures?
Enterprises need pollution control to preserve environmental resources and improve quality for mankind’s benefit. Reasons include:
(i) Reduction of health hazards: Pollutants cause diseases like cancer and heart issues; control measures prevent these and support a healthy life.
(ii) Reduced risk of liability: Enterprises may pay compensation for harm from wastes; control devices reduce this risk.
(iii) Cost savings: Effective programmes minimise wastes, lowering disposal and cleaning costs from improper technology.
(iv) Improved public image: Society’s growing environmental consciousness influences attitudes; responsible firms gain a reputation as socially aware.
(v) Other social benefits: Results in clearer visibility, cleaner buildings, better quality of life, and purer natural products.
5. What steps can an enterprise take to protect the environment from the dangers of pollution?
Steps an enterprise can take:
(i) Definite commitment by top management to create a work culture for environmental protection and pollution prevention.
(ii) Ensuring commitment is shared by all divisions and employees throughout the enterprise.
(iii) Developing clear policies and programmes for quality raw materials, superior technology, scientific waste disposal, and employee skills for pollution control.
(iv) Complying with government laws and regulations for pollution prevention.
(v) Participation in government programmes on hazardous substances, river cleaning, tree plantation, and checking deforestation.
(vi) Periodical assessment of pollution control programmes for costs and benefits to improve progress.
(vii) Arranging workshops and training to share technical information with suppliers, dealers, and customers for involvement in control programmes.
6. Explain the various elements of business ethics.
The elements of business ethics are:
(i) Top management commitment: The CEO and higher managers must openly commit to ethical conduct, provide leadership, and uphold organisational values for results.
(ii) Publication of a ‘Code’: Define principles in a written document covering honesty, law adherence, product safety, workplace health, conflicts of interest, employment practices, fairness in marketing, and financial reporting.
(iii) Establishment of compliance mechanisms: Ensure actions match standards through ethics in recruiting/hiring, training emphasis, regular audits, and communication systems for reporting unethical behaviour.
(iv) Involving employees at all levels: Employees at different levels implement policies; form small groups to discuss ethics policies and examine attitudes.
(v) Measuring results: Audit compliance with ethical standards, though end results are hard to measure; discuss findings with top management and employees for further action.
7. Discuss the guidelines enumerated by the Companies Act 2013 for Corporate Social Responsibility.
The Companies Act 2013, under Section 135, provides guidelines for CSR:
(i) Applicability: Applies to companies with a net worth of Rs. 500 crore or more, turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more in the preceding financial year.
(ii) CSR Committee: Such companies must form a CSR Committee of the Board with at least three directors, including one independent director.
(iii) CSR Policy: The Committee must formulate and recommend a CSR Policy specifying activities as per Schedule VII (e.g., education, healthcare, environment, rural development) and monitor its implementation.
(iv) Expenditure: Ensure spending at least 2% of average net profits from the preceding three financial years on CSR activities.
(v) Monitoring and Reporting: Implement a transparent monitoring mechanism; report CSR activities annually in the Board’s report; if unspent, explain reasons and transfer to specified funds.
(vi) Activities: Focus on local areas; can collaborate with other entities; ongoing projects allowed with timelines.
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