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Business Ethics

Essay by   •  August 9, 2011  •  Essay  •  374 Words (2 Pages)  •  1,592 Views

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In the present age, business has become the most powerful and important power in the world which impose a huge impact on the development of society. Should companies take the social responsibility or only need to focus on their own interests? This problem has sparked much debate.

Some people tend to think that companies have to focus on their own interests primarily. As Friedman claims that an executive's responsibility is to conduct the business focus on the shareholders' desires, which means to make as much money as possible. Because the executives are hired by the shareholders to maximize profits, they must show their loyalty to their shareholders. If they want to do something to benefit the society under the risk of sacrificing profits, they would lose their job in the end. Take the cigarette company as an example; the cigarette companies in China make big profits annually although they know cigarette bring a deadly harm to human health. It can be seen from the arguments presented earlier that executives will always focus primarily on profit rather than social responsibilities to ensure they fulfill the shareholders' interests.

By contrast, there is an equal amount of people support the claim that businesses have an obligation to be social responsible. John Kenneth Galbraith is a proponent of an alternative model of business against Friedman's stockholder model known as the stakeholder model. The stakeholder model is that the executives have responsibilities to be intent on all groups' interests related to their firms. The same as Galbraith's claim, Ben Cohen, who is the co-founder of Ben and Jerry's Ice Cream, also assert that companies need to start to learn to use their power proactively not just focus on their own interests but also the interests of society as a whole. The companies against the good of society seem to eventually go bankrupt. The point can be confirmed by the example of Enron. Enron was a leader of gas production, transmission and marketing in America, but the company went bankrupt in 2001 because of the misleading accounts.

In summary, according to both of these claims, companies focus on profits primarily in order to satisfy their shareholders. At the meanwhile, they conduct their business within the basic rules, regulations and also ethical customs.

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