Why should business be socially responsible?

Why should business be socially responsible?

Social responsibility is a voluntary effort on the part of business to take various steps to satisfy the expectation of the different interest groups. As you have already learnt, the interest groups may be owners, investors, employees, consumers, government, and society or community. But the question arises, why the business should come forward and be responsible towards these interest groups. Let us consider the following points:

i.            Public Image – The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of business also depend upon the public image of its activities. People prefer to buy products of a company that engages itself in various social welfare programmes. Again, good public image also attracts honest and competent employees to work with such employers.

ii.            Government Regulation – To avoid government regulations businessmen should discharge their duties voluntarily. For example, if any burn:-firm pollutes the environment it will naturally come under strict government regulation which may ultimately force the firm to close down its business. Instead, the business firm should engage itself in maintaining a pollution free environment.

iii.            Survival and Growth – Every business is a part of the society. So for its survival and growth, support from the society is very much essential. Business utilizes the available resources like power, water, land, roads, etc’ of the society- So it should be the responsibility of every business to spend a part of its profit for the welfare of the society.

iv.            Employee satisfaction – Besides getting good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education and training. The employers should try to fulfil all the expectations of the employees because employee satisfaction is directly related to productivity and it is also required for the long-term prosperity of the organization. For example, if business spends money on training of the employees, it will have more efficient people to work and thus, earn more profit. t.

v.            Consumer Awareness – Now-a-days consumers have become very conscious about their rights. They protest against the supply of inferior and harmful products by forming different groups. This has made it obligatory for the business to protect the interest of the consumers by providing quality products at the most competitive price.

Responsibility towards Different Interest Groups

The business generally interacts with owners, investors, employees, suppliers’ customers, competitors, government and society. They are called as interest groups because by each, and Livery activity of business, the interest of these groups is affected directly or indirectly. Responsibility of Business towards Different Interest Groups

Responsibility towards owners

Owners are the persons who own the business. They contribute capital and bear the business risks. The primary responsibilities of business towards its owners are to:

1. Run the business efficiently.
2. Proper utilization of capital and other resources.
3. Growth and appreciation of capital.
4. Regular and fair return on capital invested.

Responsibility towards investors

Investors are those who provide finance by way of investment debentures, bonds, deposits, etc. Banks, financial institutions, and investing public are all included in this category. The responsibilities of business towards its investors are :

1. Ensuring safety of their investment,
2. Regular payment of interest,
3. Timely repayment of principal amount.

Responsibility towards employees

Business needs employees or workers to work for it. These employees put their best effort for the benefit of the busing it is the prime responsibility of every business to take care of the interest of their employees. If the employees are satisfied and efficient, then only the business can be successful. The responsibilities of business towards its employees include:

1. Timely and regular payment of wages and salaries.
2. Proper working conditions and welfare amenities.
3. Opportunity for better career prospects.
4. Job security as well as social security like facilities of provident fund group insurance, pension, retirement benefits, etc.
5. Better living conditions like housing, transport, canteen, cr6ches, etc.
6. Timely training and development.

 Responsibility towards suppliers

Suppliers are businessmen who supply raw materials and other items required by manufacturers and traders. Certain suppliers, called distributors, supply finished products to the consumers. The responsibilities of business towards these suppliers are:

1. Giving regular orders for purchase of goods.
2. Dealing on fair terms and conditions.
3. Availing reasonable credit period.
4. Timely payment of dues.

Responsibility towards customers

No business can survive without the support of customers. As a part of the responsibility of business towards them the business should provide the following facilities:

1. Products and services must be able to take care of the needs of the customers.
2. Product and services are must be qualitative
3. There must be regularity in supply of goods and services.
4. Price of the goods and services should be reasonable and affordable.
5. All the advantages and disadvantages of products as well as procedure to use the products must be informed do the customers,
6. There must be proper after-sales service.
7. Grievances of the consumers, if any, must be settled quickly.
8. Unfair means like under weighing the product, adulteration, etc. must be avoided.

Responsibility towards competitors 

Competitors are the other businessmen, or organizations involved in a similar type of business. Existence of competition helps the business in becoming more dynamic and innovative so as to make itself better than its competitors. It also sometimes encourages the business to indulge in negative activities like resorting to unfair trade practices. The responsibilities of business towards its competitors are

1. Not to offer exceptionally high sales commission to distributors, agents, etc.
2. Not to offer to customers heavy discounts and, /or free products in every sale.
3. Not to defame competitors through false or ambiguous advertisements.

Responsibility towards government

Business activities are governed by the rules and regulations framed by the government. The various responsibilities of business towards-government are:

1. Setting up units as per guidelines of government
2. Payment of fees, duties and taxes regularly as well as honestly.
3. Not to indulge in monopolistic and restrictive trade practices.
4. Conforming to pollution control norms set up by government.
5. Not to indulge in corruption through bribing and other unlawful activities.

Responsibility towards society

A society consists of individuals, groups, organizations, families, etc. They all are the members of the society. They interact with each other and are also dependent on each other in almost all activities. There exists a relationship among them, which may be direct or indirect. Business, being a part of the society, also maintains its relationship with all other members of the society. Thus, it has certain responsibilities towards society, which may be as follows:

1. to help the weaker and backward sections of the society
2. to preserve and promote social and cultural values
3. to generate employment
4. to protect the environment
5. to conserve natural resources and wildlife
6. to promote sports and culture
7. To provide assistance in the field of developmental research on education, medical science, technology, etc.