BE/U5 Topic 1 Social Responsibility of business with respect to different stakeholders
Business depends on society for inputs like money, men, and skills and also for market where products have to be sold to the customers. The business depends on society for existence, sustenance and encouragement.
Being so much dependent on society, business also has a definite responsibility towards different segments of society. Though profit making is one of main objectives of business but it has to satisfy employees, consumer, government, community, shareholders also.
No Enterprise can succeed without the whole-hearted cooperation of the employees. Responsibility of business towards employees is in the form of training, promotion, proper selection, fair wages, safety, health, worker’s education, comfortable working conditions, participation management etc.
The employees should be taken into confidence while taking decisions affecting their interests. The workers should be offered incentives for raising their performance. Mental, physical, economic and cultural satisfaction of employees should be taken care of. If business looks after the welfare of employees then they will also work whole heartedly for the prosperity of business.
The committee that conducted ‘social audit’ of TISCO (Tata Iron and Steel Company) observes, “not only should the company carry out its various obligations to the employees as well as the larger community as a matter of principle, but this has also led to a higher degree of efficiency in TISCO works and an unparalleled performance in industrial peace and considerable team spirit and discipline which have all resulted in high productivity and utilisation of capacity.”Thus, by discharging its responsibility to employees the business advances its own interests.
‘TATAS’ have been the first to enforce certain laws in favour of employees. Similarly Godrej & Boyce, Shriram Industries and TVS groups are also good employers. Financial position of company and economic conditions of nation should be taken into consideration while spending on labour welfare during performance of responsibility towards employees.
Business is accountable towards owners as well as managing business profitably, ensuring fair and regular return on capital employed, consolidating financial position of business, guaranteeing capital appreciation so as to enable the owners to withstand any business contingencies.
Responsibility of business towards consumer extends to:
Quality goods should be produced and supplied. Distribution system should make goods easily available to avoid artificial scarcities and after sales service should be prompt. Buying capacity and consumer preferences should be taken into consideration while deciding the manufacturing policies. The care must be exercised in supplying the goods of quality which has no adverse effect on the health of consumers.
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.
Consumers all over the world are, by and large, dissatisfied because the performance of businessman is far from satisfactory. Consumer is not the king in our country but a vehicle used by businessmen for driving towards the goal of profit maximisation.
As a result of which the concept of ‘consumerism’ has come up to protect the rights of consumers. Even the government is interfering in a big way to protect the interests of consumers.
A number of legislatives are formed from time to time by the government for proper regulation and control of business. 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.
A number of taxes are imposed on business for collecting revenue. Businessmen should pay various taxes in time and help government in collecting funds. They should not resort to tax evasions rather declare their incomes honestly and correctly.
But series of raids conducted on business houses clearly show that businessmen have failed to discharge their responsibility towards government.
Shareholders who are the owners of business should be provided with correct information about company to enable them to give them true and fair position of the company to enable them to decide about further investments.
Company should provide a fair return on the investment made by shareholders. If shareholders do not get proper dividend then they will hesitate to invest additional funds in the concern. Shareholders should be kept fully informed about the working of the company for healthy growth of the business. The Companies Act 1956 also requires company to give full disclosure in the published statements.
Company should strengthen the share prices by its growth, innovation and diversification. At the same time shareholders shall also offer wholehearted support and co-operation to the company to protect their own interests.
Responsibility of business towards community and society includes spending a part of profits towards civic and educational facilities. Every industrial undertaking should take steps to dispose of Industrial wastes in such a way that ecological balance is maintained and environmental pollution is prevented.
Rehabilitating the population displaced by business units should also De part of responsibly of business? Business houses should set up units at those places where sufficient space is available for housing colonies of workers. The promotion of small scale industries will help not only nation but will also help in building up a better society.
Business should protect the environment which has acquired great importance all over the world. Business can discharge the responsibility of protecting environment in following way:
(i) Preservation of Natural Resources:
Scarce natural resources should be used very carefully as these are depleting at a very fast rate. The alternative sources can also be found out to save natural resources like to save forests alternative to wood and pulp can be found, the use of coal can be reduced by alternative source of energy.
(ii) Pollution Control:
Appropriate steps should be taken to prevent environmental pollution and to preserve ecological balance. The industrial waste should be disposed off carefully or if possible can be recycled to minimise pollution. The toxic wastes, excessive noise, chemical pesticides, automobile exhaust etc. need to be checked from time to time.