TN State Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

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 is called code.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 3.
State two ways by which ethics influences behavior.
Answer:

  • To offer goods at fair prices.
  • To supply quality goods and not to deal in spurious and sub standard products.

Question 4.
What is need for Corporate Governance?
Answer:

  1. Corporate governance is the system by which businesses are directed and controlled in the best interest of all stakeholders.
  2. Good corporate governance enables corporate success and economic development.

Question 5.
What are MNCs?
Answer:

  1. A Multinational corporation is an organization doing business in more than one country.
  2. It engages in various activities like exporting, manufacturing in different countries.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 6.
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 7.
What do you mean by the concept of business ethics?
Answer:

  • ‘Business houses need to go beyond the interests of their companies to the communities they serve.’
  • Ratan Tata, Former Chairman of the Tata group.
  • ‘A business that is in the making of only money is a poor kind of business’.
  • Hendry Ford, Founder of Ford Motor Corporation.

Question 8.
Why is ethics necessary in business?
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 societal objective and vice versa.

All business units have realised 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.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 9.
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.
  7. Provides incentive to managers to achieve organizational objectives.

Question 10.
Illustrate with example the working of a MNC.
Answer:
Any company is referred to as a Multinational company or corporation (MNC) 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 othet countries.
eg: IBM, Coca Cola, Pepsi.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 11.
Explain the different key elements of business ethics.
Answer:
(i) Top Management Commitment:
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 arid guide people working at middle and low level to follow ethical behaviour.

(ii) 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 document called code.

(iii) Establishment of Compliance Mechanise:
To make sure that actual decisions match with a firm’s ethical standards, suitable mechanism should be established. Any organisation following ethical codes in training, recruitment, selection etc., is sure to be profitable.

(iv) 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.

(v) 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.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 12.
Describe the code of business ethics.
Answer:
The code of business ethics can include the following:
(i) To offer goods at fair prices.
(ii) To supply quality goods and not to deal in spurious and sub standard products.
(iii) To listen to consumer’s complaints and to reduce them.
(iv) Not to raise the price of its products unjustifiably.
(v) Not to resort to hoarding and black marketing.
(vi) Not to resort to price cutting with the sole aim of killing competition.
(vii) Not to issue advertisement containing false information or exaggerated claims.
(viii) To pay fair wages to its employees and not to exploit them.
(ix) To provide congenial work atmosphere.
(x) To design production process in such a way as to reduce environmental pollution.
(xi) To keep proper books of accounts and records.
(xii) To pay taxes regularly.
(xiii) Not to overlook Government rules and regulations even at the time of incurring losses.

Question 13.
Explain the significance of Corporate Governance from the point of Stakeholders.
Answer:
Corporate governance specific the rights and liabilities of different group of people like the chief executives, directors of the board, managers of different departments and other stakeholders. This helps to provide the structure through which the objectives of the company formulated and their performance is monitored.
(i) Good corporate governance enables corporate success and economic development.
(ii) Ensures stable growth of organizations.
(iii) Aligns the interests of various stakeholders.
(iv) Improves investors confidence and enables raising of capital.
(v) Reduces the cost of capital for companies.
(vi) Has a positive impact On the share price
(vii) Provides incentive to managers to achieve organizational objectives.
(viii) Eliminates wastages, corruption, risks and mismanagement.
(ix) Improves the image of the company.
(x) The organization is managed to benefit the stakeholders.
(xi) Ensures efficient allocation of resources
(xii) Creates a strong brand as an ethical business.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 14.
Discuss the role of International Benchmarking on the working of Companies in India.
Answer:
(i) 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.

(ii) The USA:
The Council of Institutional Investors (CII), Corporate Governance Policies state that at least 2/3rd of the directors should be independent.

(iii) Europe:
European commission urges member states to have sufficient number of independent non-executive or supervisory directors on Board.

(iv) 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.

(v) The UK:
UK businesses had voluntary targets first set in 2011 i.e. to have 25% women on FTSE100 (The Financial Times Stock Exchange) Boards by 2015.

(vi) 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.

(vii) Brazil:
A bill pending in the Brazilian Senate would impose a 40% female, quota on the Boards of state owned enterprises by 2022.

(viii) 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.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 15.
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 considerable portion of their assets internationally.
  3. They are huge industrial/business organisation.
  4. It engages in international production and operates plants in a number of countries.
  5. They take managerial decisions on 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 corporations overall business.

Question 16.
Illustrate the ethical practices followed by different reputed organisation giving practical examples.
Answer:
Physicians:
The American medical association also imposes a code of ethics on physicians. This code of ethics addresses everything from impersonal relationship with other staff members such as nurses information on patient care.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 17.
Create case studies concerning the existing famous organisation following ethical practices quoting their real life practice.
Answer:

  1. Use real life examples: If you are free to choose a topic on your own try to take it from real life. However avoid real names.
  2. Finish every part of your study with points for discussing. They will engage your reader and help him orient in the study.

Question 18.
Identifying ethical codes based on which organisation exits, for long run and short run, justifying the adherence of code of ethics.
Answer:
Two of the 22 identified excerpts involved individuals referring to ethical guidelines that are clear and penalties potentially serious. Responses falling under this theme tend to refer to guidelines when they believe a clear concrete rule is available and when consequences may be substantial and costly.

Question 19.
Money earning cannot be sole objective of business or life.
Answer:

  • Yes, because reputation is very important, but primary objective is to earn profit.
  • Even though business run on commercial lines. Service is the main objective of business while running the business money is important at the same service to the society and public is very important.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

Question 20.
The mind of students to accept that ethics and consideration for environment, law etc can lengthen the income earning of an individual or business.
Answer:
As you might imagine environmental legislation is a broad topic. Mainly because the natural environment encompasses. So many different aspects. So environmental laws need to consider everything from the air we breathe to the natural resources we rely on to the plants and animals that share this world with us.

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

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

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

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 18 Business Ethics and Corporate Governance

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

→ The important concept of business ethics is discussed briefly. Business ethics is vital for ‘ running of all organisations both in the short long run the code of conduct of business units are clearly defined and executed in terms of transparency through corporate governance.

→ The role of MNCs in the development of the economy is explained along with the features. The need for international benchmarking is also highlighted. Business houses need to go beyond the interests of their companies to the communities they serve.

→ Corporate governance is the system by which business are directed and controlled in the best interests of all shareholders.

TN Board 11th Commerce Important Questions

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