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CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment

A manufacturing company in Pune voluntarily spends part of its profits on a village school and a clean drinking water project near its plant, although no law compels this particular spending. Which concept does this best illustrate?

The company's spending illustrates corporate social responsibility. CSR means a business takes responsibility for its impact on society and contributes to community welfare, such as education and drinking water, beyond its narrow profit motive, rather than engaging in pricing or integration strategies.

  1. ACorporate social responsibilityCorrect
  2. BPrice discrimination
  3. CVertical integration
  4. DTransfer pricing

Explanation

Voluntary spending by a firm for the welfare of the community around it is the core idea of corporate social responsibility. The other options are pricing, integration and intra-group pricing terms, which have nothing to do with community welfare.

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