Samacheer Kalvi 11th Commerce Solutions Chapter 18 Business Ethics and Corporate Governance

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Samacheer Kalvi 11th Commerce Solutions Chapter 18 Business Ethics and Corporate Governance

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Samacheer Kalvi 11th Commerce Business Ethics and Corporate Governance Textbook Exercise Questions and Answers

I. Choose the Correct Answer

Question 1.
Which of the following helps in maximising sale of goods to society?
(a) Business success
(b) laws and regulations
(c) Ethics
(d) Professional management
Answer:
(c) Ethics

Question 2.
Ethics is important for …………….
(a) Top management
(b) Middle level managers
(c) Non – managerial employees
(d) All of them
Answer:
(d) All of them

Question 3.
Which of the following does not ensure effective ethical practices in a business enterprise?
(a) Publication of a code
(b) Involvement of employees
(c) Establishment of compliance mechanisms
(d) none of them
Answer:
(a) Publication of a code

Question 4.
The role of top management is to guide the entire organisation towards …………….
(a) General behaviour
(b) Organisation behaviour
(c) Ethically upright behaviour
(d) Individual behaviour
Answer:
(c) Ethically upright behaviour

Question 5.
The ethical conduct of employees leading to standard practices results in …………….
(a) Good behaviour
(b) Bad behaviour
(c) Ethical behaviour
(d) Correct decision making
Answer:
(d) Correct decision making

II. Very Short Answer Questions

Question 1.
What is ethics?
Answer:
Ethics is derived from the Greek word ‘ethos’ which means a person’s fundamental orientation towards life. It governs the behaviour, derived from the moral standards which help to determine right or wrong, good or evil.

Question 2.
What do you mean by code?
Answer:
The organisation principles are defined in the written document called code.

Question 3.
State two ways by which ethics influences behaviour.
Answer:
Ethical behaviour is the acts consistent with the moral standards or codes of conduct established by society.

Question 4.
What is need for Corporate Governance?
Answer:
Corporate Governance is the system by which businesses are directed and controlled in the best interests of all stakeholders.Good corporate governance enables corporate success and economic development.

Question 5.
What are MNCs?
Answer:
MNC is defined to be an enterprise operating in several countries but managed from one country. A Multinational corporation is an organization doing business in more than one country.

III. Short Answer Questions

Question 1.
Define business ethics.
Answer:
Business ethics may be defined as a set of moral standards to be followed by owners, managers and business people. These standards determine the conduct and behaviour of business people. Business ethics reflects the conduct in the context of business.

Question 2.
What do you mean by the concept of business ethics?
Answer:
Business exists to supply goods and services to the people from social point of view but from individual point of view, the primary objective of any business unit is to make profit. The individual objective should not be in conflict with societal objective. These two objectives normally contradict each other, as one business enterprise may be good in individual objective and bad at social objective and vice versa.

Question 3.
Why is ethics necessary in business?
Answer:
All business units have realized that ethics is vitally important for the existence and progress of the business as well as the society. It is very important as it improves public image, earns public confidence, and leads to greater success. Ethics and profits go together in the long run. It enhances the quality of life, standard of living and business.

Question 4.
What are the benefit of Corporate Governance to Share holders.
Answer:

  1. Good corporate governance enables corporate success and economic development.
  2. Ensures stable growth of organizations.
  3. Aligns the interests of various stakeholders.
  4. Improves investors confidence and enables raising of capital.
  5. Reduces the cost of capital for companies.
  6. Has a positive impact on the share price.

Question 5.
Illustrate with example the working of a MNC.
Answer:
Any company is referred to as a multinational company or corporation (M. N. C.) when that company manages its operation or production or service delivery from more than a single country. It has its Headquarter based in one country with several other operating branches in different other countries. IBM, Microsoft, Pepsi Co., Sony, etc. are the examples of MNC’s.

IV. Long Answer Questions

Question 1.
Explain the different key elements of business ethics.
Answer:
1. Top Management Coriimitment:
Top management has a very important role to guide the entire organization towards ethical behaviour. The top level personnel in any organisation should work openly and strongly committed towards ethical conducts and guide people working at middle and low level to follow ethical behaviour.

2. Establishment of Compliance Mechanism:
To make sure that actual decisions match with a firm’s ethical standards, suitable mechanism should be established..

3. Publication of a “Code”:
Generally organisations formulate their own ethical codes for the conduct of the enterprise; it should followed by the employees of the organisation. The organisation principles are defined in the written docunient called code.

4. Involving Employees at All Levels:
It is the employees at different levels who implement ethics policies to make ethical business a reality. Therefore, their involvement in ethics programmes becomes a must.

5. Measuring Results:
The organisations from time to time keep a check on ethical practise followed. Although it is difficult to accurately measure the end results of ethics programmes, the firms can certainly audit to monitor compliance with ethical standards.

Question 2.
Describe the code of business ethics.
Answer:
Code of ethics documents the generally accepted principles of ethical conduct. They are statements of values and principles which define the purpose of an organisation. It gives a clear picture of the standards that employees should follow. It guides them in decision making. The code of business ethics can include the following:

  1. To offer goods at fair prices.
  2. To supply goods of good quality and not to deal in spurious and sub standard products.
  3. To listen to consumer’s complaints and to reduce them.
  4. Not to raise the price of its products unjustifiably.
  5. Not to resort hoarding and lack marketing.
  6. Not to resort to price cutting with the sole aim of killing competition.
  7. Not to issue advertisement containing false information or exaggerated claims.
  8. To pay fair wages to its employees and not to exploit them.
  9. To provide congenial work atmosphere.
  10. To design production process in such a way as to reduce environmental pollution.
  11. To keep proper books of accounts and records.
  12. To pay taxes regularly.
  13. To complaint with various business loss and never to flout Government regulations.

Question 3.
Explain the significance of Corporate Governance from the point of Stakeholders.
Answer:
Balanced economic development is made possible through transparent management under corporate governance. All Stakeholders interests are protected and promoted through corporate governance. Some of the benefits of corporate governance are as follows.

  1. Good corporate governance enables corporate success and economic development.
  2. Ensures stable growth of organizations.
  3. Aligns the interests of various stakeholders.
  4. Improves investors’ confidence and enables raising of capital.
  5. Reduces the cost of capital for companies.
  6. Has a positive impact on the share price
  7. Provides incentive to managers to achieve organizational objectives.
  8. Eliminates wastages, corruption, risks and mismanagement.
  9. Improves the image of the company.
  10. The organization is managed to benefit the stakeholders.
  11. Ensures efficient allocation of resources
  12. Creates a strong brand as an ethical business.

Question 4.
Discuss the role of International Benchmarking on the working of Companies in India.
Answer:

  • Asia: Independent Directors are a requirement for listed companies in all Asian economies, where most require at least 1/3rd of the Board to be independent.
  • USA: The Council of Institutional Investors (CII), Corporate Governance Policies state that at least 2/3rd of the directors should be independent.
  • Europe: European Commission urges member states to have sufficient number of independent npn-executive or supervisory directors on Board.
  • G20 / OECD: The latest principles encourage the prominent role of independent Board members.
  • Japan: In early. 2014, Japanese Prime Minister announced the goal of increasing the percentage of women in executive positions at Japanese companies to 30% by 2020.
  • UK: UK businesses had voluntary targets first set in 2011 i.e. to have 25% women on FTSE 100 (The Financial Times Stock Exchange) Boards by 2015.
  • Canada: At the Federal level, two bills are currently being tabled which will impose a 40% quota for female Board members of public companies and other regulated entities such as banks and insurance companies.
  • Brazil: A bill pending in the Brazilian Senate would impose a 40% female quota on the Boards of state owned enterprises by 2022.
  • France: French parliament adopted a bill that requires public companies making at least 50 million Euros in turnover and employing more than 500 workers to have 40% female Board representation by 2017.

Question 5.
Describe the benefits of increasing the number of MNCs.
Answer:

  1. Considers opportunities throughout the globe though they do the business in a few countries.
  2. To invest a considerable portion of their assets internationally.
  3. They are a huge industrial / business organisation.
  4. It engages in international production and operates plants in a number of countries.
  5. They take managerial decisions from a global perspective.
  6. They produce in one or a few countries and sell them in most of the countries.
  7. Their international operations are integrated into the corporation’s overall business.

The entry of MNC’s into India has proved quite beneficial for the growth and development of the Indian economy providing employment Opportunities for the young generation.

Samacheer Kalvi 11th Commerce Business Ethics and Corporate Governance Additional Questions and Answers

I. Choose the Correct Answer:

Question 1.
Which of the following is not one of the underlying principles of the corporate governance combined code of practice?
a) acceptability
b) integrity
c) openness
d) accountability
Answer:
a) acceptability

Question 2.
The organisation principles are defined in the written document called ……………..
(a) Code
(b) Law
(c) Behaviour
(d) Ethical
Answer:
(a) Code

Question 3.
The primary stakeholders are ……………
a) Customers
b) Suppliers
c) Shareholders
d) Creditors
Answer:
c) Shareholders

Question 4.
There are …………….. primary types of bench making.
(a) Two
(b) Three
(c) Four
(d) Five
Answer:
(c) Four

Question 5.
The goal of corporate governance and business ethics education is to ……………
a) Teach students their professional accountability and to uphold their personal integrity to society.
b) Change the way in which ethics is taught to students.
c) Create more ethics standards by which corporate professionals operate.
d) Increase the workload for accounting students.
Answer:
c) Create more ethics standards by which corporate professionals operate.

Future Learning

Question a.
Money earning cannot be the sole objective of business or life.
Answer:
The primary objective is to make a profit. The individual objective should not be with societal objectives.

Question b.
The mind of students to accept that ethics and consideration for the environment, law, etc can lengthen the income-earning of an individual or business
Answer:
All business units have realized that ethics is vitally important for the existence and progress of the business as well as society. Ethics and profits go together in the long run. It enhances the quality of life, the standard of living, and business.

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