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The limitations of electronic mode of doing business are given below: 

• Low personal Touch: It lacks the warmth of interpersonal interactions. Therefore, such products which need personal touch like beauty products, garments, fashion accessories etc. can’t be traded through e-business. 
• Mismatch between order giving/taking speed and order fulfillment speed: Sometimes websites take a long time to open which may frustrate the user. Even after giving or taking order, it takes enough time to give physical delivery of goods. It also plays on the patience of the customer. 
• Knowledge of technology is must: For e-commerce both the parties need fairly high degree of familiarity with the world of computers. It divides the society into two parts i.e; one who are familiar with digital technology and other who are not. 
• Increased risk due to parties being unknown to each other: When two parties are involved in e-business, they are unaware of personal identities of each other. They do not even know the locations of the parties involved. It makes e-business risky. There may also be problems of virus and hacking. 
• People Resistance: People are resistant to change their ways and adopt new technology. Change is perceived as a source of stress and insecurity by many. 
• Ethical Concerns: These days companies use an electronic eye to keep track of the websites being used by employees, computer files that they use, their e-mal accounts etc. It is not ethical. But in spite of these limitations, e-business is the way. No, these limitations are not severe enough to restrict its scope. 
• Improvement in Information Technology: With the improvement in information technology and emergence of internet the process of outsourcing and e-business is on an expansionary path. Anti virus and improved security measures are increasing to make e-business more secure and safer option. 
• More and more Interactive Websites: Websites are becoming more and more interactive. It is removing the problem of ‘low personal touch’. 
• Improvement in Communication Technology: Communication technology is continually evolving and increasing the speed and quality of communication through internet so that customer does not get frustrated in processing the order. 
• Diffusion of E-Commerce in all nooks and corners of the country: An order to diffuse ecommerce in all nooks and corners, India has undertaken about 150 such projects. It is increasing the number of people acquainted with digital technology. We can conclude that e-business will continue to stay and reshape the businesses, governance and economies.

Outsourcing has emerged as a way of doing business due to global competitive pressures for higher quality products at lower costs, ever demanding customers and emerging technologies. Need for outsourcing can be understood from the benefits which are given below: 

• Focusing of Attention: Business firms are realizing the importance of focusing on core areas where they have distinct ability and core competence and contracting out the rest of the activities to their outsourcing partners. A business organization needs to decide its core areas and non-core areas. Once they outsource non-core areas, they can focus their attention on selected activities. It will increase efficiency and effectiveness. 
• Quest for Excellence: Outsourcing enables the firms to attain excellence in two ways: (a) By focusing on activities selected, their excellence in those activities increases. (b) They excel by extending their capabilities through contracting out the remaining activities to them who excel in them. 
• Cost Reduction: In the age of globalization, cost reduction is of vital importance to survive in the market. Division of labour not only enhances quality but also reduces cost. For example, India is preferred as an outsourcing destination because of cost factors. 
• Growth through alliance: When some activities are outsourced then these alliance partners invest for the outsourced activities. Business can be expanded by same amount of investible funds as now these funds are to be invested in limited number of activities. 
• Fillip to Economic Development: Outsourcing stimulates entrepreneurship, employment and exports in the host countries. For example, in India there has been remarkable growth in entrepreneurship, employment and exports that today India is an undisputed leader in software development and IT enable services.  But outsourcing is not an unmixed blessing. It has its own limitations. Some of which are discussed below: 
• Confidentiality: When a business opts for outsourcing, it has to share a lot of vital information and knowledge. This information may be leaked by the outsourcing partner. It may be against the outsourcing firm. It is also possible that the outsourcing partner starts a business of same line after getting such information. 
• Ethical Concerns: Many a time, outsourcing makes use of child labour and violates labour laws to reduce costs. They also discriminate in wages on the basis of sex. 
• Sweat Shopping: A firm which goes in for outsourcing actually transfers ‘doing’ skills rather than ‘thinking’ skills. Therefore, they do not create skilled manpower in developing countries but just take maximum benefit of low cost labour by transferring non intellectual tasks. 
• Resentment in their Home Countries: Outsourcing is being disliked by people in developed countries because the jobs which they could get are being transferred to developing countries through outsourcing. The problem is still more severe if there is problem of unemployment in home country of outsourcing firm.

Outsourcing refers to assigning non-core activities to an outside experienced agency for better outcomes/results at reduced cost. It has become a global phenomenon and represents a new mode of business. 

Need for outsourcing

(1) Focussed attention: The process helps companies to focus on key areas or activities which are crucial for their success. This helps them to use their resources to the optimum.

(2) Quest for excellence: This enables companies to pursue excellence, first by working on their core competencies in which they excel and second by assigning the non-core tasks to those who excel in performing them.

(3) Reduced cost: Work is outsourced to professional agencies with ample amount of experience in those specific tasks. These agencies perform the same tasks for several different companies. Thus, client organisations benefit from cost advantage which arises out of increased output of production (economies of scale). This results in cost reduction for client organisations, thereby being cost effective.

(4) Fillip to economic development: Offshore outsourcing (outsourcing work to less developed countries) by different countries helps trigger entrepreneurship, employment and exports in the host countries. 

Example: The IT sector in India grew because of various outsourcing projects from various countries.

E-business and outsourcing are referred to as emerging modes of business. Prefix ‘emerging’ puts emphasis on the fact that these businesses are in the process of development. These changes are happening here and now, and, that these changes are likely to continue. In fact, three changes are taking place most strongly: 

• Digitizaton: The conversion of text, sound, images, video and other content into a series of ones and zeroes that can be transmitted electronically. 
• Outsourcing: Contracting out non core activities to outside firms.
• Internationalisation and globalisation: More and more foreign companies are entering into India and sending Ashia and Indian companies becoming MNCs. Therefore, Ebusiness and outsourcing referred to as the emerging modes of business.

Following factors are responsible for the growing importance of these trends:

• Improvement in Information Technology: With the improvement in information technology and emergence of internet the process of outsourcing and e-business is on an expansionary path. 
• More and More Interactive Websites: Websites are becoming more and more interactive. It is removing the problem of ‘low touch’. 
• Improvement in Communication Technology: Communication technology is continually evolving and increasing the speed and quality of communication through internet. 
• Diffusion of E-Commerce in all nooks and corners of the country: In order to diffuse ecommerce in all nooks and corners, India has undertaken about 150 such projects. It is also growing importance of these trends. 
• Global Competitive Pressures for higher quality products: Due to adoption of new economic policy of 1991 in India, there has been an increase in competitive pressure from giant sized MNCs and global enterprises. 
• Ever Demanding Consumers: There is increasing demands from consumers for high quality products at minimum cost. Therefore, e-business and outsourcing are being chosen as newer options. But e-business and outsourcing are not emerging out of compulsion but also out of choice because of its benefits to consumers as well as producers.

(c) Outsourcing and E-Commerce 

You will discover find here class 11 Business Studies MCQ Questions of Emerging Modes of Business with Answers dependent on the significant ideas and points are given in the reading material according to CBSE new exam pattern. This might help you to comprehend and check your insight about the parts. Multiple Choice Questions with Answers are given here definite solutions. So, you can without much of a stretch understand the logic behind each answer. 

The MCQ Questions for Class 11 Business Studies with answers have been arranged according to the most recent syllabus. Class 11 Business Studies understudies ought to allude to the accompanying Multiple Choice Questions with answers for Emerging Modes Of Business in class 11. Realize your preparation level of MCQ Questions for Class 11 Business Studies with Answers. These MCQ Questions with answers for Class 11 Business Studies will come in tests and assist you with scoring great marks.

1. Here, parties involved in the electronic transactions are from within a given business firm, hence, the name is ________

(a) Intra-C Commerce
(b) Intra-D Commerce
(c) Intra-B Commerce
(d) Intra-A Commerce

2. Both Sellers and buyers are business firms, under ___type of e-commere transaction

(a) B2B Commerce
(b) C2B Commerce
(c) B2C Commerce
(d) C2C Commerce

3. Which method is very popular for making online transactions?

(a) Credit Card
(b) All of these
(c) Net banking
(d) Debit Card

4.____________ refers to contracting out some of its activities to a third party which were earlier performed by the organisation.

(a) BPO
(b) E-Commerce
(c) Outsourcing
(d) E-Banking

5. Under what method payment is made at the time of physical delivery of goods

(a) Cash on delivery
(b) Debit card payment
(c) Credit card payment
(d) Prepaid amount

6. It is not an application of e-business

(a) Contract R&D
(b) Online trading
(c) Online procurement
(d) Online bidding

 7.Expand VPN

(i) Virtual Public Network
(ii) Virtual Popular Network
(iii) Virtual Private Network
(iv) Virtual Personal Network8

8. India is the preferred destination for BPO because of

(i) Cheap People
(ii) Tax Free Zone for BPOs
(iii) Poor conditions
(iv) Cheap Manpower

9. It is not an application of e-business :

(i) Online bidding
(ii) Online procurement
(iii) Online trading
(iv) Contract R and D.

10. Which method is very popular for making online transactions?

(i) Credit Card
(ii) All of these
(iii) Net banking
(iv) Debit Card

11. Which one of the following is used to avoid transactional risk?

(i) Credit Card Authentication
(ii) Digital cash.
(iii) Cyber Cells
(iv) Encryption

12. Factoring is ___type of outsourcing service.

(i) Financing
(ii) Advertising
(iii) Courier service
(iv) Customer support

13. Historically, the term e-commerce originally meant facilitation of __________ transactions using Electronic Data interchange (EDI) technology to send and received commercial documents like purchase orders or invoices.

(a) C2B Commerce

(b) C2C Commerce

(c) B2B Commerce

(d) B2C Commerce

14. India is the preferred destination for BPO because of ____________

(a) Cheap People

(b) Tax Free Zone for BPOs

(c) Poor conditions

(d) Cheap Manpower

15. Expand VPN

(a) Virtual Public Network

(b) Virtual Popular Network

(c) Virtual Private Network

(d) Virtual Personal Network

16. Formation of Consumers Forum and Pressure groups is an example of

(a) C2C

(b) B2B

(c) B2C

(d) Intra B

17. Principle types of outsourcing services are:

(a) Courier service

(b) Advertising

(c) Financing

(d) All of the above

18. Use of EDI (Electronic Data Interchange) technology to send and receive commercial documents like purchase order etc is an example of

(a) B2B

(b) C2C

(c) B2C

(d) Intra B

19.Video Conferencing is an example of which type of e business transaction

a) B2E

b) Intra B

c) B2B

d) B2C

20. In outsourcing the process may be outsourced to

a) All of the options.

b) Horizontals.

c) Verticals

d) Captive BPO unit.

21. Which one of the following is used to avoid transactional risk?

a) Credit Card Authentication

b) Digital cash.

c) Cyber Cells

d) Encryption

22. Which one of the following is the Benefit of outsourcing?

a) Cost reduction

b) Sweat shopping

c) Resentment in home country

d) Ethical fall out

23. Principle types of outsourcing services are:

a) All of the options

b) Advertising

c) Financing

d) Courier service

24. The risk of VIRUS is a common type of

a) Storage risk

b) None of the options

c) Both Storage risk & Transactional risk

d) Transactional risk

25. Outsourcing___________

a) Restricts only to the contracting out of non core business activities.

b) Includes off shoring

c) Restricts only to the contracting out of Information Technology Enabled Services.

d) Includes both core and non core business activities but restricted to only domestic territory

Answer:

Correct Answer is: c. Ethics 

The Right option : (c) Ethics 

There are a number of risks to which data is exposed while it is stored or is en-route in a transaction. Vital information may be stolen or modified to pursue individual gains. There can be attacks of VIRUS and hacking. Virus means Vital Information Under Siege.

It is a program which replicates itself on the other computer systems. The effect of computer viruses can range from some annoying on-screen display (Level-1 virus), disruption of functioning (Level-2 virus) damage to target data files (Level-3 virus), to complete destruction of the system (Level-4 virus).

Anti-virus programmes need to be installed and updated on the system and files and disks should be scanned with them to provide protection from virus attacks. Data may be intercepted in the course of transmission. Cryptography is used for protection against such risks. It refers to the art of protecting information by transforming it (encrypting it) into an unreadable format called ‘cyphertext’.

Only those who possess a secret key can decipher (or decrypt) the message into ‘plaintext’ and thus others do not understand your conversation.

(b) General electric (GE)

Ethics are self-imposed while laws are imposed by an external governing authority.

It is right to say that E-commerce is giving way to paperless society. Government is also formulating laws to help in this creation. It is clear from the laws formulated under IT Act, 2000:

1. Legal recognition of electronic records: Where any law provides that information or any other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is rendered or made available in an electronic form; and accessible so as to be usable for a subsequent reference. For example, a company can send notice for AGM using e-mail. 

2. Retention of electronic records: Where any law provides that documents, records or information shall be retained for any specific period, then, that requirement shall be deemed to have been satisfied if such documents, records or information Eire retained in the electronic form. For example, if results are preserved in electronic form it will work. 

3. Legal recognition of digital signatures: Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person, hence notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of digital signature affixed in such a manner as may be .prescribed by the Central Government. 

4. Use of electronic records and digital signatures in Government and its agencies: Where any law provides for the filling of any form, application or any other document with any office, authority, body or agency owned or controlled by the appropriate government in a particular manner; the issue or grant of any license, permit, sanction or approval by whatever name called in a particular manner; the receipt or payment of money in a particular manner, then, notwithstanding anything contained in any other law for the time being in force, such requirement shall be deemed to have been satisfied if such filing, issue, grant, receipt or payment, as the case may be, is effected by means of such electronic form as may be prescribed by the appropriate government. All these provisions of IT Act, 2000 are helping us to move towards a paperless society.

Pollution is change in the physical, chemical and biological characteristics, air, land and water.

Outsourcing has raised certain ethical concerns which need to be considered. In search of cheap labour, manufacturing processes are being outsourced to developing countries where they use child labour/women in the factories and working conditions are unhygienic and even unsafe.

The companies cannot do so in their developed home countries due to stringent laws forbidding use of child labour. This raises the ethical concern whether this sort of cost cutting by using child labour justified. Similarly there is a concern over the ethical aspect of outsourcing the work to countries where gender based wage-discrimination is done and hence women are paid lower wages.

Global competitive pressures for higher quality products at lower costs, ever demanding customers and emerging technologies are responsible for the continuing emergence of outsourcing as a mode of business.

Need for outsourcing is outlined in the following points:

(i) Focused Attention Business firms are realizing that focusing their limited resources on a few areas where they have core competence, and contracting out the rest of the activities to their outsourcing partners can lead to better efficiency and effectiveness.

(ii) Quest for Excellence Outsourcing enables the firms to pursue excellence by virtue of limited focus and also by extending their capabilities through contracting out the remaining activities to those who excel in performing them.

(iii) Cost Reduction: It has become necessary for firms operating in global markets to maintain quality of products while keeping prices low. Thus, the only way to survival and profitability is cost reduction. The outsourcing partners deliver the same service to a number of organizations and hence benefit from economies of large scale leading to lower cost.

(iv) Growth through Alliance: Investment requirements are reduced when some activities are outsourced. Outsourcing also facilitates inter organizational knowledge sharing and collaborative learning.

(v) Stimulates Economic development: Outsourcing stimulates entrepreneurship, employment and exports in the host countries, e.g., IT sector in India has become undisputed leader as far as global outsourcing in software development and IT-enabled. services are concerned having 60 per cent of the global outsourcing share in the informatics sector.

But there are certain limitations of outsourcing as given below:

(i) Confidentiality Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not maintain the confidentiality it can harm the interest of the party that outsburces its processes.

(ii) Sweat-Shopping Outsourcing firms seek to lower their costs by utilizing the lowcost manpower of the host countries. Moreover, the work that is outsourced is not of the type which may build the competency and capability of the outsourcing partner.

(iii) Ethical Concerns In search of cheap labour, manufacturing processes are being outsourced to developing countries where they use child labour/women in the factories and working conditions are unhygienic and even unsafe. This raises ethical concerns.

(iv) Resentment in the Home Countries The process of outsourcing manufacturing, marketing, research and development or IT-based services involves contracting out jobs or employment opportunities from the home country which causes resentment particularly if the home country is suffering from the problem of unemployment.

During the last decade or so the way of doing business has undergone fundamental changes. The manner of conducting business is referred to as the ‘mode of business’, e-business and outsourcing are referred to as ‘emerging modes of business’ as these have brought about new changes in the way or manner in which business is conducted and it is believed that these trends are likely to continue, e-business may be defined as the conduct of industry, trade and commerce using the computer networks, e-business covers a firm’s interactions with its customers and suppliers over the internet and also other electronically conducted business functions such as production, inventory management, product development, accounting and finance and human resource management.

Outsourcing represents a new mode of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency and, even investment. Generally the non-core business activities are outsourced but of late even some of the core activities are being outsourced. Outsourcing comprises four key segments: contract manufacturing, contract research, contract sales and informatics.

The various factors responsible for the growing importance of these trends are:

1. Business managers and thinkers keep evolving newer and better ways of doing things in an effort to improve the business processes. 

2. Business firms have to strengthen their capabilities of creating utilities and delivering value successfully to meet the competitive pressures. 

3. Consumers have become far more demanding than ever in terms of higher quality, lower prices, speedier deliveries and better customer care. 

4. Business as an activity has to keep evolving by adopting new trends in order to ‘ benefit from emerging technologies.

(i) It is in long term interest of the business. 

(ii) It is justified for growth and existence of business.

Awareness amongst people, overall environment of the area where business is located.

(a) Changes in Health: E-health is following the same path, with electronic patient records slowly being introduced and health insurance schemes starting to refund e-health services. This will be a user driven development as it is more likely that the users will be able to adapt to e-health much faster than the healthcare system can deliver it. This will clear the way for a whole new e-health industry, worth billions of dollars. One has to look at some of the e-health systems linked to the high end private hospitals in the USA to see what is in store. They use their e-health facilities as a major marketing tool to attract customers, not just to the actual hospital, but to all the other facilities around it. The add on revenues are significant. 

(b) Progress in e-education: It is moving at an enormous pace and already some schools are limiting the number of printed textbooks – some are going totally e-book. With over a million children now with laptops it is only a matter of time before the education system to switch over. The savings in books and other printed material alone will pay for this digital revolution. South Korean schools will be entirely e-book-based by 2015. 

(c) Governance: Many e-government services on offer around the world already provide citizens with relatively sophisticated services and the establishment of a fiber based broadband network may see governments improve and broaden the range of web services even further. In addition, mobile services are being incorporated in service offerings and computing is becoming integrated. The Internet of Things (IoT) and M2M wifi also impact upon this sector. Those who are still talking about broadband as an end in itself; do not understand the situation. Broadband is simply the tool that will further enable and advance the digital economy.

The following steps are involved in on-line trading:

(i) Registration. Before online shopping one has to register with the online vendor by filling up a registration form. In this form one has to give a password to protect the account otherwise anyone can log in your account.

(ii) Placing an Order In online transactions the order can be placed by picking and dropping the items in the shopping cart. Shopping cart is an online record of what you have picked up while browsing. After being sure of what you want to buy then check out from shopping cart and choose your payment option.

(iii) Payment Mechanism In an online purchase payment is made through

• Cash on, delivery 
• Through cheque 
• Net banking transfer 
• Credit or debit card 
• Digital cash

[Note If they ask steps in e-trading then following steps are to be mentioned]

• Opening bank ale 
• Opening demat account with a depositoiy participant 
• Opening online trading account with stock brokers 
• Trading software installation 
• Bidding and trading in securities

Business ethics refer to the socially determined moral principles which should govern business activities. Laws are determined by the legal bodies of a country.

Social responsibility of business towards its employees: It is important because they are the wheels of an organization. Without their support, the commercial institution simply can’t function or operate. 

If a business takes care of the needs of its human resource (for e.g. office staff, employees, workers, etc.) wisely, it will boost the motivation and working spirit within an organization. A happy employee usually gives his best to the organization in terms of quality labour and timely output than an unsatisfied one. A pleasant working environment helps in improving the efficiency and productivity of working people. 

A good remuneration policy attracts new talented professionals who can further contribute to its growth and expansion.Thus, if personnel are satisfied, then they will work together very hard and aid in increasing the production, sales and profit. Social responsibility of business towards its consumers or customers: It matters a lot from sales and profit point of view. Its success is directly dependent on their level of satisfaction. Higher their rate of satisfaction, greater is the chances to succeed. If a business rolls out good-quality products and/or delivers better quality services that too at reasonable prices, then it is natural to attract lots of customers. If the quality- price ratio is maintained well and consumers get worth for their money spends, this will surely satisfy them. In the long run, customer loyalty and retention will grow, and this will ultimately lead to profitability.

Social responsibility of business towards its shareholders or investors is most important of all other obligations. 

If a business satisfies its investors, they are likely to invest more money in a project. As a result, more funds will flow in and the same can be utilized to modernise, expand and diversify the existing activities on a larger scale. Happy financiers can fulfill the rising demand of funds needed for its growth and expansion.

1. They need to give a fair return to shareholders.

2. They need to give true and fair information to shareholders.

3. They need to give them proper opportunity to participate.

The core objectives of social responsibility of business are as follows: 

1. It is a concept that implies a business must operate (function) with a firm mindset to protect and promote the interest and welfare of society. 

2. Profit (earned through any means) must not be its only highest objective else contributions made for betterment and progress of a society must also be given a prime importance. 

3. It must fulfill its social responsibilities honestly in regard to the welfare of society in which it operates and whose resources and infrastructures it makes use of to earn huge profits. 

4. It should never neglect (avoid) its responsibilities towards society in which it flourishes

Social responsibility of business towards government’s regulatory bodies or agencies is quite sensitive from the license point of view. If permission is not granted or revoked abruptly, it can result in huge losses to an organization. Therefore, compliance in this regard is necessary. 

Furthermore, a business must also function within the demarcation of rules and policies as formulated from time to time by the government of state or nation. It should respect laws and abide by all established regulations while performing within the jurisdiction of state. Some examples of activities a business can do in this regard:

• Paying fair taxes on time,
• Following labor, environmental and other laws, etc.
• Seeking permissions wherever necessary,
• Licensing an organization,

If laws are respected and followed, it creates goodwill of business in the eyes of authorities. Overall, if a government is satisfied it will make favourable commercial policies, which will ultimately open new opportunities and finally benefit the organization sooner or later.

Following values are of utmost importance when we get involved in e-business: 

• Confidentiality: We must keep information of our clients confidential. 
• Business ethics: Electronic eye should not be kept for personal usage. Its use must be minimized only for critical situations and in critical areas. 
• No Undesirable Information: Our website must not advertise or promote any such thing which is not desirable from society point of view. 
• Take all safety precautions: We must take safety precautions to ensure safety of data and to protect against risks of data storage.

Arguments for social responsibility are:

1. Long-term interest of the firm: A firm and its image stand to gain maximum profits in the long run when it has its highest goal as ‘service to society’. 

2. Converting problems into opportunities: Related with the preceding argument is the argument that business with its glorious history of converting risky situations into profitable deals can not only solve social problems but it can also make them effective effectively useful by accepting the challenge. 

3. Justification for existence and growth: Business exists for providing goods and services to satisfy human needs.

4. Avoidance of Government Regulations: Form the point of view of a business, government regulation are undesirable because they limit freedom. 

5. Favorable environment for business: To have a favorable atmosphere for the business to flourish, it is essential for every business to be socially respondent. 

6. Maintenances of society: It is noticed that many government organizations and social organizations have failed in improving the conditions of the society. 

7. Consumerism: The movement of consumerism also influences the business concerns to undertake social responsibilities. 

8. Availability of resources with business: The business concern has more resources in terms of labour, capital and materials etc.

Arguments against the social responsibility of business:

1. Lack of social skills: All social problems cannot be solved the way business problems are solved. In fact, businessmen do not have the necessary understanding and training to solve, social problems. 

2. Lack of broad public support: Here the argument is that the public in general does not like business involvement or interference in social programmes. 

3. Burden on customers: If business undertaking accepts the social responsibility. They are very costly and often require huge financial investments. In such circumstances businessmen are likely to simply shift this burden of social responsibility.

4. Government duty: Undertaking of social welfare schemes is the duty of government, but not of business. So business need not accept the social responsibility 

5. Violation of profit maximization objectives: According to this argument the main – object of business is earning profit. Business exists only for profit maximization. But and talk of social responsibility is against this objectives. In fact business can best fulfill its social responsibility. 

6. Conflict: The main aims of business is maximizing profit and social responsibility of business aims at providing services to society. Therefore there will be conflicts between profit motive and service motive of business concerns.

Arguments against social responsibility 

1. Violation of Profit Maximisation: As per this argument, business enterprises claim that our objective is profit maximisation. Business can reduce its cost and raise profits and then only it can meet its social responsibility. 

2. Lack of Social Skills: Business enterprises neither have skill nor experience to solve all types of social problems. Therefore, it should be handled by specialised agencies. 

3. Burden on Consumers: Many of the social responsibilities cost a lot and its burden falls on consumers only. 

4. Lack of Broad Public Support: Business cannot operate successfully because of lack of cooperation and confidence from public to business enterprises.

The social responsibility of business comprises of the following obligations:

• A business must give a proper dividend to its shareholders or investors.
• It must provide fair wages and salaries with good working conditions.
• It must provide a regular supply of good quality goods and/or services to its consumers/customers at reasonable prices.
• It must abide by all government rules and regulations, support its business related policies and should pay fair taxes without keeping any delays or dues.
• It must also contribute for the betterment of a local community by doing generous activities like building schools, colleges, hospitals, etc.
• It must take immense care to see that its activities neither directly nor indirectly create havoc on the vitality of its surrounding environment.
• It should maintain a stringent policy to curb or control pollution in regard to contamination of air, water, land, sound and radiation leakages. It must hire experienced professional individuals who are experts in their respective fields.
• It should also offer social-welfare services to the general public.

Correct Answer is: a. Social obligation

It is the responsibility of a business to pay attention on the maintenance and expansion of returns for all of its shareholders on important management issue, and constantly strives to improve its business performance and financial structure. The company’s dividend policy calls for maintaining stable dividends, and Casio determines the allocation of profit by taking into account all factors such as profit levels, financial position, the dividend pay out ratio, and future business development and forecasts.

It will not be wrong to say that hackers lack certain values: 

• They do not value the importance of other persons privacy. They are keen to use others efforts for their selfish means and even for fun. 
• They wish to get many things without putting an effort for it using short cuts and illegal means. 
• But remember in exceptional cases, hacking is also used to find criminals and to solve criminal cases.

The primary objective of any business enterprise is profit maximization. This is because profit acts as a measure of success and at the same time is the main source of income for an enterprise. Also, profits are often used to finance the expansion projects of a business enterprise. However, it is argued that business enterprises are not merely profitmaking entities. They are considered as social institutions, too, as they are created by society. As every business makes use of society’s resources in terms of human and physical capital, it cannot work in isolation from society. Its operations are affected by social problems such as unemployment and poverty. Thus, a need arises to create a balance between the business interests and social interests of a business enterprise, such that it can grow by doing the maximum good to society. Hence, we can say that a business enterprise is a social institution and not merely a profit-making entity. In this regard, the following are some of the responsibilities that must be fulfilled by an enterprise:

• Paying taxes on time. 
• Paying fair wages to employees. 
• Supplying quality products at reasonable prices to customers. 
• Cooperating with the government in solving social problems, such as unemployment, poverty and illiteracy.

A business has some responsibility towards:

• Shareholders or investors who contribute funds for business. 
• Employees and others that make up its personnel. 
• Consumers or customers who consume and/or use its outputs (products and/or services).
• Government and local administrative bodies that regulate its commercial activities in their jurisdictions. 
• Members of a local community who are either directly or indirectly influenced by its activities in their area. 
• Surrounding environment of a location from where it operates. 
• The general public that makes up a big part of society.

Arguments for Social Responsibility:

1. Justification for Existence and Growth: Although the main motive of any business is profit but the prosperity and growth of business is not possible without a continuous service to the society. Therefore, it is justified for a business to assume social responsibility. 

2. Avoidance of Government Regulation: Businessmen can avoid the problem of government regulations by assuming social responsibilities voluntarily which helps to reduce the need for new laws. 

3. Maintenance of Society: Those people who do not get a return for their hardships get indulged in anti-legal activities. Therefore, it is advisable for business enterprises to assume their social responsibilities. 

4. Long Term Interest of the Firm: If consumers, workers, shareholders, government officials feel that they are not getting what they deserve, they start to withdraw their hands from business. It may prove more expensive for an enterprise. 

5. Availability of Resources with Business: A business enterprise has effective human and financial resources to solve many of the social problems. 

6. Converting Problems into Opportunities: Business can make risky situations useful by using their efficiency. 

7. Better Environment for Doing Business: Business system should do something to meet needs before it is confronted with a situation when its own survival is endangered. 

8. Holding Business responsible for Social Problems: Environmental pollution, unsafe workplaces, corruption in public institutions and discriminatory practices in employment are some of the problems which have caused due to business enterprises. 

Arguments against Social Responsibility: 

1. Violation of Profit Maximization: As per this argument, business enterprises claim that our objective is profit maximization. Business can reduce its cost and raise profits and then only it can meet its social responsibility. 

2. Lack of Social Skills: Business enterprises neither have skill nor experience to solve all types of social problems. Therefore, it should be handled by specialized agencies. 

3. Burden on Consumers: Many of the social responsibilities cost a lot and its burden falls on consumers only. 

4. Lack of Broad Public Support: Business cannot operate successfully because of lack of cooperation and confidence on behalf of public to business enterprises.

Correct Answer is: a. Little chance of success

i. minimising

ii. legal

iii. Mahatma Gandhi

iv. reasonable

v. Remuneration

vi. Ethos

Media can raise voice against business malpractices.

Business ethics can be defined as the code of conduct that a business must follow, such that it takes up only those activities that are desirable from the viewpoint of society. The purpose of business ethics is to guide managers and other employees in an organisation in performing their jobs in a manner that is socially acceptable. The following are some of the elements of business ethics.

• Top-level officers, such as the CEO’s and other higher level managers, must sincerely follow the ethical code of conduct. They should also guide other employees in their organisation in adopting the code.
• An enterprise must clearly define the ethical code of conduct to be followed in the organisation. The code should include quality standards for work, laws governing production and employee’s health and safety standards.
• In addition to setting performance standards, an enterprise must also devise a mechanism through which it can measure the actions of individual employees. This should be done in order to confirm whether the ethical standards are being met.
• The successful implementation of ethical standards depends to a large extent on the involvement of employees at different levels. This is because it is the employees who actually implement the ethical codes.
• Although it is difficult to measure the end results of implementation of ethical standards, the top management should take steps to monitor compliance. Also, it must take serious action against any unethical behaviour in the organisation.

Correct Answer is: b. Broader than legal responsibility

(b) Broader than legal responsibility

Protection of the environment is a serious issue that confronts business managers and decision makers. Business enterprises need to adopt pollution control measures due to following reasons:

(i) Reduction of Health Hazards Pollutants in the environment can cause many diseases like cancer, heart attacks and lung complications. Pollution control measures are needed to check the spread of such diseases for ensuring a healthy life on Earth.

(ii) Reduced Risk of Liability If an enterprise is held liable for causing damage to people by the toxicity of gaseous, liquid and solid wastes it has released into the environment, it may be required to pay compensation to the affected people. This risk of liability can be reduced by installing pollution control devices in its premises.

(iii) Cost Savings Improper production technology results in greater wastes which leads to higher cost of waste disposal and cost of cleaning the plants. An effective pollution control programme can thus save operating costs of business.

(iv) Improved Public Image Society today is conscious of environmental quality and hence a firm’s policies and practices for controlling wastes influence people’s attitude towards its working. A firm that adopts pollution control measures will be perceived as a socially responsible enterprise.

(v) Other Social Benefits Pollution control results in many other benefits like clearer visibility, cleaner buildings, better quality of life, and the availability of natural products in a purer form.

(vi) Legal Obligations There are certain laws in place to controal pollution with which the business enterprises also have to comply so as to control pollution which causes risks with environment quality. Human health and damage to natural and man-made resources.

The following are the forces which are responsible for increasing the concern of business enterprises for social responsibility.

• Threat of Public Regulation: The government is meant to safeguard the interests of society. Thus, in case the government feels that a business enterprise is behaving in a manner that is not socially desirable, then it can regulate the operations of that enterprise accordingly. 
• Pressure of Labour Movement: The increase in capital mobility over time has increased the pressure on business enterprises to pay attention to the welfare of workers, by providing them with healthy working conditions along with good remuneration. 
• Impact of Consumer Consciousness: As consumers today are aware of their rights and responsibilities, they take their decisions more rationally. Thus, business enterprises are made to work more efficiently and produce better products at reasonable rates to satisfy their customers. 
• Development of Social Standards: Business enterprises are not merely profit-making entities. For their long-term growth and existence, they require fulfilling the new standards of social welfare. 
• Development of Business Education: The spread of education over time has made consumers, investors, employees and owners aware of social problems, thereby making them more sensitive to social issues. 
• Relationship Between Social Interest and Business Interest: No business enterprise can work in isolation from society. Thus, there should be a balance between business interests and social interests, such that the business can grow by doing the maximum good to society. 
• Development of a Professional Managerial Class: Every business professional pursues the goal of profit maximization. But today’s professional managers make efforts to satisfy the interests of all members of society.

(b) Some social problems 

It has been rightly said that like an individual, a business enterprise should also be a loyal citizen to the state. Therefore, it has to be kept in mind.

• Social needs of our country while deciding on what goods and services are to be produced. Therefore, a businessman in India must prefer necessities to cosmetics and dog food in a country like India where 26% people are below poverty line. 
• Production of liquor, tobacco and other undesirable products should be avoided. Production method should be used. If a country is labour abundant, the business should give preference to labour intensive techniques.

(1) Workers are the real architects of success in any business unit. Investments in human resources (capital) gives rich rewards in the long run.

(2) The success and failure of the business organisations to greater extent depend on the support and participation of employees. Therefore, business organisations should encourage workers to participate in management through various schemes like giving suggestions, saving costs, quality circles, profit sharing co-ownership, etc.

(3) When workers are given opportunity to participate in the management, it will raise their morale. This in turn will give the workers a sense of belongingness. They will take an active part in completion of the work assigned to them.

(4) Workers’ participation in the management r enables the organisation to win the confidence of employees. It creates and maintains good, healthy and improved relationship between labour and management which is necessary for the success of any organisation.

Corporate social responsibility is a comprehensive set of policies, practices and programmes which are integrated into business operations, supply claims, and decision making process throughout the company, wherever the company does business and includes responsibility for current actions as well as past and future actions.

The concept of social responsibility of business is based on the idea that a business functions in the society and uses the physical and human resources of the society for its day to day functioning, and so, it is obliged to serve the society.