BOM Assignment

Meaning of Social Responsibility

An organization’s obligation to make decisions and perform them for the benefit of society and its values is known as Social
Responsibility. It is assumed under social responsibilities that businesses will respect the values and aspirations of society and try their best
to fulfil these aspirations and accomplish their business goals. In simple terms, it is the responsibility of an organization to be a responsible
member of society and work towards its betterment. However, according to critics, social responsibility practices are exact opposites of the
major motive of a business’s existence. Social responsibility in business is also known as Corporate Social Responsibility (CSR).
For example, a factory not disposing of its chemicals and waste in the water bodies, improving working hours and conditions of the
employees, donating part of the firm’s profits to educational services for poor children, etc. Social responsibilities performed by the
companies not only help society, but also help the business gain a positive image and build its brand in the market. It motivates the
employees of the firm to work hard, as they feel good to be a part of an organization that works well for society and respects its values.
Corporate Social Responsibility is a business model used by companies to enhance society and the environment through concerted efforts. It
is a great way for business organizations to build morale in the workplace and build a good image in the market. Some of the companies
strongly committed to CSR are IKEA, Bosch, Apple, Ben and Jerry’s, Starbucks, Marc Jacobs, and Adidas.
Need for Social Responsibility
Although an organization exists with the aim of maximizing profits; however, it should not be its sole motive and should commit to society.
An organization needs social responsibility because of the following reasons:
1. Changing Expectations of Society: Today’s world has changed a lot compared to the past years. Now, society expects different things
from a business besides the supply of goods and services. As society provides companies with different resources like labour, natural
resources, etc., it expects something good in return for their welfare.
2. Reputation: Companies spend a lot of money on brand building and a good image in society. To do so, an organization can also perform
socially responsible practices that will it result in profitability, increased sales, sustainable growth, a good image and attraction of talent.
3. Avoidance of Government Interference: Government has enacted various laws, putting moral and legal pressure on the companies to
perform socially responsible activities. If the company fails or avoids these practices, the government will interfere in the business.
Therefore, to avoid such interference by the government, companies need to perform their social responsibilities.
4. Long-term Self-interest: Practicing socially responsible practices not only helps society, but also proves to be beneficial for the
companies in the long run. It means that if a company has an image in the market as a brand or firm that serves society besides earning a
profit, it will build the company’s image and will be good for its self-interest.
5. Contribution to Social Problems: Businesses create some of the social problems, like pollution, inequality, discrimination, unsafe
workplace, etc. Therefore, it is those firms’ duty and obligation to perform socially responsible activities to solve these social problems and
make society better and safe.
6. Better Environment for Business: Businesses use natural resources for their daily activities of the business and usually degrade the
environment in the process. Therefore, business organizations need to avoid environmental degradation caused by them. It not only benefits
society, but also gives firms a chance to grow their business in a healthy and safe environment.
7. Growth of Consumer: The consumer of the present world is more educated and aware of their rights and powers as compared to the past.
They know when a business is engaged in unfair trade practices, giving them bad quality goods and services, charging more price, etc., and
what measures they can take for the same. Therefore, organizations need to work with social responsibility to retain existing customers and
attract more.
8. Optimum Utilization of Resources: One of the aims of businesses while producing and selling goods and services to customers is
optimum utilization of resources. As we know that with the increase in population, resources have become scarce, and we need to save them
for future generations. Therefore, business organizations need to make optimum utilization of resources and work with social responsibility.
Arguments for Social Responsibility
The arguments for Social Responsibility are as follows:
1. Justification for Existence and Growth: Business uses the resources of society and is a creation of society, so it is expected to satisfy
human needs by providing goods and services. Profit earning should be looked at as an outcome of service to the people. If the image of the
business is good, it enjoys the support of society, and it can prosper and grow only when it fulfils its social responsibility.
2. Long-term Interest of Firms: A firm can be profitable and prosperous only when it thinks of being profitable in the long run. A firm and
its image stand to gain maximum profits in the long run when it has its highest goal as Service to Society. A business has to fulfil social
responsibility towards various groups of society, like workers, consumers, shareholders, government officials, etc.
3. Avoidance of Government Regulations: If a business does not want intervention from the government, then it must fulfil social
responsibility. The government can restrict the freedom and flexibility of a business, and enact and force them to assume social
responsibility, so businesses should voluntarily fulfil their obligations to society.
4. Maintenance of Society: If the people related to the business feel that they are not getting their dues from the business, then they may
resort to anti-social activities. This can distort the image of the business and can be very harmful, so businesses must fulfil their social
responsibility.
5. Availability of Resources with Businesses: The problems of society can be effectively solved with the help of valuable financial and
human resources of the businesses. For example, managerial talent and capital resources, and years of experience in organising business
activities can help society to tackle its problems better, given the huge financial and human resources at its disposal.
6. Converting Problems into Opportunities: Businesses can convert problems into opportunities by taking risks. It takes risk as the reward
of profit bearing. It not only solves social problems but also provides opportunities for growth. For example, the problem of regional
disparity can be solved by setting up industries in backward regions, and it can benefit the business as it gets various tax benefits.
7. Better Environment for Doing Business: There are little chances for the success of a business when society is confronted with diverse
and complicated problems. Thus, in order to have a better environment for doing business, the business should meet its social
responsibilities.
8. Holding Business Responsible for Social Problems: As business uses capital, physical and human resources of the society and a lot of
social problems like environmental pollution, unsafe workplace, corruption, etc., arise due to the activities of a business. So it becomes the
moral responsibility of the business to help society in solving problems and serving society.
Arguments against Social Responsibility
The arguments against Social Responsibility are as follows:
1. Violation of Profit Maximisation Objective: It is considered that social responsibility is against the objective of profit maximisation. But
business is an economic activity and its main goal is to earn and maximise profit.
2. Burden on Consumers: Huge financial investment, which has no proper return, is required to fulfil social responsibilities, like in the case
of pollution control and environmental protection. The burden of such costs is usually passed on to consumers in the form of higher prices. It
is unfair to pass the burden on consumers in the name of social responsibility.
3. Lack of Social Skills: There is a difference between the way in which how business problems and social problems are solved. A person
might be good at managing a business but may not have the required skills to solve complex social problems. Therefore, social problems
should be solved by specialised agencies.
4. Lack of Broad Public Support: Businesses do not get the support of people as the public does not like the involvement or interference of
businesses in social programmes.
Reality of Social Responsibility
1. Threat of Public Regulation: There is always a threat of public regulation on businesses. Businesses have to act in a responsible manner
otherwise strict actions are taken to regulate them for safeguarding people’s interests. Due to the threat of public regulation businesses now
feel concerned with social responsibility.
2. Pressure of Labour Movement: Business enterprises are forced to pay due regard to the welfare of workers instead of following a policy
of ‘hire and fire’ because labour is now more educated and organised. Because of such labour movements, businesses practice social
responsibilities.
3. Impact of Consumer Consciousness: Consumers are more conscious of their rights and power in determining market forces because of
the development of education and mass media and increasing competition in the market. The principle of Caveat Emptor or let the buyer
beware has been replaced by the principle of ‘Customer is King’. Customer-oriented policies are now being followed by businesses.
4. Development of Social Standard for Business: A business cannot exist in isolation. Society permits a business to grow and prosper.
Business is now not considered as a mere money-making entity. It has to follow social norms and standards as developed by society.
5. Development of Business Education: More and more people are aware of the social purpose of business because of the development of
business education with its rich content of social responsibility. Consumers, investors, employees, and owners have become more aware and
sensitive towards social issues than before.
6. Relationship between Social Interest and Business Interest: Social interest and business interest are not contradictory, but
complementary to each other. Businesses have realised that they cannot grow in the long run by exploiting society. Instead, they can prosper
by serving society.
Social Responsibility towards different Interest Groups
Business social responsibility is a voluntary effort of businesses to take a few steps and measures in order to satisfy the expectations of
different interest groups. An interest group represents an association of individuals or organizations that on the basis of one or more shared
concerns, attempts to influence public policy in their favour. Business is concerned with interest groups because every decision and action a
company takes will directly or indirectly affect the interests of these groups. The following are the responsibilities of businesses towards
different interest groups.
1. Social Responsibility of Businesses towards the Owners
Business owners are the person who owns the businesses. They are liable for all profits and losses. Owners take all the risks of running the
business, capital allocation, etc. The following are the responsibilities of businesses towards their owners:
 To run the business efficiently.
 To allocate and utilize capital and resources.
 To ensure appreciation and growth of capital.
 To provide a fair and regular return on capital invested.
2. Social Responsibility of Businesses towards Investors
Investors are those who provide funds to businesses through various investment instruments(Equity, Bonds, Debentures, etc.). Financial
institutions, HNIs, and retail investors fall under this category. The following are the responsibilities of businesses towards their investors:
 To provide required and essential information regarding the schemes of future growth.
 To ensure the safety of investors’ investments.
 To provide regular payment of interest.
  To give timely repayment of the principal amount to the investors.
3. Social Responsibility of Businesses towards Suppliers
Suppliers are businessmen or merchants who supply raw materials and other items that are required by manufacturers or traders. A supplier
also includes a distributor who supplies the final finished product to the consumers or customers. The following are the responsibilities of
businesses towards their supplier:
 To give regular orders for the purchase of goods.
 To make a deal with fair terms and conditions.
 To avail reasonable credit period.
 To pay the dues on time.
4. Social Responsibility of Businesses towards Customers
Businesses produce and sell goods or services to customers. It cannot survive without the support of the customers and have to fulfill their
wants and needs in order to attain success. The following are the responsibilities of businesses towards their consumers:
 To provide customers with goods and services that fulfils their needs and requirements.
 To provide them with qualitative goods and services.
 To maintain a regular supply of goods and services in the market.
 To provide customers with goods and services at reasonable and affordable prices.
 To provide them with proper after-sales services for the purchased goods and services.
 To provide customers with every essential information including warnings regarding the goods and services.
 To provide them with a manual for the use of goods and services.
 To follow proper and fair trade practices and take corrective measures against malpractices.
 To ensure that the grievances of the customers are listened to and resolved quickly.
5. Social Responsibility of Businesses towards Employees
All businesses need employees and workers to work for their business. These employees put in their best effort for the benefit of the
businesses. If employees are satisfied with their needs and requirements, they will work efficiently, which will help in the success of the
business. The following are the responsibilities of businesses towards their employees:
 To provide the employees and workers with timely and regular salaries and wages, respectively.
 To provide them with a good workplace and safe environment.
 To provide the employees with better career opportunities and prospects.
 To provide the employees with job security and social security through Provident Fund, Health Insurance, Retirement Benefits,
etc.
 To provide them with proper training for their development and growth.
 To respect their democratic rights in the formation of unions.
6. Social Responsibility of Businesses towards Society or Community
Society consists of various entities, including individuals, groups, organizations, families, etc. All these entities are related to each other; they
interact with each other and also depend on each other, directly or indirectly. It is the responsibility of every entity to perform a job or a
business that will benefit society at large. The following are the responsibilities of businesses towards the society:
 To maintain a balance between the economy and the ecosystem.
 To generate employment opportunities.
 To protect the environment by conserving natural resources and wildlife.
 To promote sports and culture.
 To help the weaker sections of society.
 To preserve the social and cultural values of the society and promote these values.
 To provide proper assistance in education, development, etc., of society.
7. Social Responsibility of Businesses towards Government
Businesses are governed by certain rules and regulations which are set by the government. These rules and regulations also help businesses to
perform their responsibilities towards society. The following are the responsibilities of businesses towards the government:
 To pay fees, duties, and taxes honestly and regularly.
 To set up new business units as per the guidelines provided by the Government.
 To follow the pollution control norms set up by the Government.
 To run the business fairly and not indulge in any corruptive and unfair activities.
Conclusion
In conclusion, the social responsibility of business goes beyond the pursuit of profit and highlights
the broader obligation that companies have toward society. A business does not operate in
isolation; it functions within a social, economic, and environmental framework. Therefore, it is
essential for businesses to balance their economic objectives with ethical practices,
environmental sustainability, and community welfare. By adopting socially responsible policies
such as fair labor practices, eco-friendly production, and contributions to social development,
businesses not only build goodwill but also ensure long-term success. Ultimately, social
responsibility is not a burden but an opportunity—it strengthens the relationship between
business and society, promotes trust, and contributes to sustainable growth for both enterprises
and communities.