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RC Challenge for SBI PO/Clerk Mains(July 14, 2018)

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Dear Aspirants,

English Section is very important to score better in Banking and other competitive exams. Now a day, the pattern of questions asked in this section are very lengthy and thus, time-consuming. But once dealt with proper strategy and accuracy, this section can get you the maximum marks in the examination. Here is another set of Questions to improve your speed and practice. Make most of it.

Directions (1-9): Read the passage carefully and answer the questions given below it. Certain words/phrases have been given in bold to help you locate them while answering some of the questions.

Milton Friedman vehemently argued against the concept of corporate social responsibility. According to him, “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

However, it must be noted that since Friedman’s time the “rules of the game” have changed. Consumers expect more from businesses today than being merely profit-centric. A study by Nielsen showed 64 per cent of people in the Asia-Pacific region are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact.

Nevertheless, Corporate Social Responsibility (CSR) is effectively a cost for any business and it eats into profits by definition. Michael Porter found middle ground between driving profit margins upward and being socially responsible with the concept of ‘shared value’. He conceptualised that it is possible to make profits while being socially responsible.

The difference between shared value and CSR can be best explained with an example: A mining company organising a tree plantation drive is CSR because it gives no economic returns to the company. On the contrary, a mining company organising a health drive around the community where it operates is ‘shared value’ since it has a clear impact on the productivity of its workers.

According to Porter and Mark Kramer, there are three ways in which companies can create shared value: by reconceiving products and markets, redefining productivity in the value chain and enabling local cluster development in the company’s area of operations. With innovation, companies can reconceive existing products and markets to address unmet societal needs; for example, manufacture healthier food or environment-friendly products.

Similarly, numerous societal issues are linked to a company’s value chain – natural resource use, working conditions, health and safety, waste generation, and so on. The societal and economic gains from investing in value chain productivity can be seen in the mining company example cited above. Lastly, since no company operates in isolation, investing in areas around it has similar benefits.

A business needs a successful community and a supporting infrastructure around it to create demand and provide critical public assets.

Over the years, there has been growing recognition among firms of the benefits of shared value. These businesses have integrated social good into their business strategies and are becoming increasingly inclusive in practice.

Apart from the goodwill these enterprises gain from socio-economic business models, they have also found it economically profitable to pursue the goal of shared value. The Shared Value Initiative India (SVII) maps such enterprises as have engaged in the ideation, and launches an annual list to highlight and celebrate their efforts towards creating shared value.

Since these companies are gradually becoming more inclusive in nature, but still have a long way to go before they manage to inculcate all the intricacies of being a shared-value enterprise, SVII calls them “Inclusive Businesses”.

In India, several companies have been creating significant societal benefits as inclusive businesses. Inclusive Business List 2016 strives to present a well rounded list of 50 such companies. Apart from covering a diverse range of industries, the list encapsulates companies practising shared-value activities in all the three aforementioned ways that Porter and Kramer theorised.

For instance, Godrej Consumer Products in the FMCG sector is reconceiving mosquito repellents, which usually need electricity or produce harmful smoke, with Fast Cards that have no such drawbacks, thus, making them highly useful for rural markets.

Mother Dairy is significantly improving the productivity of its value chain by educating dairy farmers on modern farming techniques and inculcating hygienic practices. The company’s ‘Token milk’ initiative, which serves hygienic milk through vending machines in unpacked condition, is also driving cost-efficiency by reducing plastic usage of more than five tonnes a day.

1. How can companies create shared value? Answer in the context of the passage.

(A) They can create shared value by reimagining products and markets.
(B) They can create shared value by floating shares in share market.
(C) They can create shared value by redefining productivity in the value chain.

1) Only (A) and (B)
2) Only (B) and (C)
3) Only (A) and (C)
4) All (A), (B) and (C)
5) Only (C)

2. According to Milton Friedman, which of the following is the social responsibility of a business?

1) To make schools and hospitals and help the needy
2) To use its resources and earn profits by engaging in preconceived activities
3) To produce such products as are beneficial for mankind
4) To donate part of profits to charitable trusts, NGOs and the helpless persons of the society
5) All the above

3. Which of the following statements is not true in the context of the passage?

1) Fast Cards are much better than mosquito repellents.
2) The rules of the corporate game have changed since Friedman’s time.
3) A mining company organising a tree plantation drive is an example of corporate social responsibility.
4) Through innovation companies can address unmet social needs.
5) None of the above

4. What, according to the author, is/are the expectation(s) of consumers these days?

(A) They expect lot more from business than being merely profit-centric.
(B) About two-thirds of people in the Asia-Pacific region prefer products and services of companies that are committed to positive social and environmental impact.
(C) Consumers these days prefer to purchase the products of startup companies because they are cheap and best.

1) Only (A) and (B)
2) Only (B) and (C)
3) Only (A) and (C)
4) All (A), (B) and (C)
5) Only (A)

5. According to Michael Porter –

(A) CSR is effectively a cost for any business.
(B) it is possible to make profits while being socially responsible.
(C) CSR eats into profits of the corporate.

1) Only (A)
2) Only (B)
3) Only (C)
4) Only (A) and (C)
5) All (A), (B) and (C)

6. What, according to the passage, is the difference between CSR and shared value?

1) CSR is the social responsibility of corporate whereas shared value is the amount of profit earned through investing in shares.
2) CSR is a concept of social welfare whereas shared value is the net liability of a company.
3) CSR gives no economic return to the company while shared value gives economic return by increasing the productivity of the workers.
4) CSR has lost its relevance today whereas shared value is in vogue.
5) None of the above

7. What benefits of shared value have the firms gained? Answer in the context of the passage.

1) The firms have earned goodwill of consumers.
2) They have earned monetary benefits.
3) They have regained the lost confidence of their creditors.
4) Only 1) and 2)
5) All 1), 2) and 3)

8. What step(s) has ‘Mother Dairy’ taken to improve the productivity of its chain?

(A) It has employed commission agents to book order of new shops.
(B) It has taken initiatives to educate dairy farmers on modern farming techniques.
(C) It has educated dairy farmers to follow hygienic practices.

1) Only (A)
2) Only (A) and (B)
3) Only (C)
4) All (A), (B) and (C)
5) Only (B) and (C)

9. What is the central theme of the given passage?

1) Difference between CSR and shared value
2) Social responsibility of corporate
3) Increasing competitiveness in business
4) Challenges before new companies
5) Importance of goodwill in corporate sector

Answers:

  1. 3
  2. 2
  3. 5
  4. 1
  5. 2
  6. 3
  7. 4
  8. 5
  9. 2

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