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Assess Friedman's assertion that business does not have social responsibilities other than to maximise profit - Essay Example

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Milton Friedman made one of the most controversial statements in the New York Times in the 1970s by asserting that the major role of businesses is to generate profits for the shareholders (Makower, 2006). Alternatively, he meant that businesses did not have any social…
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Assess Friedmans assertion that business does not have social responsibilities other than to maximise profit
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Assess Friedman's assertion that business does not have social responsibilities other than to maximise profit

Download file to see previous pages... world on whether sustainable business and corporate social responsibility are a distraction to the sole purpose of which is to act in the best interest of the shareholders (Cosans, 2009:392). In other words, when companies act responsibly, they risk foregoing revenue and minimising profits at the expense of a positive reputation in society. Milton’s assertion is supported by the diagram below that states a company’s profitability is achieved where Total Costs = Total Revenues.
In his article, Friedman sought to understand the statement that ‘corporate executives have a social responsibility as businesspersons’ (Makower, 2006). This statement meant that corporate executives were not to act in the best interest of their employers or stakeholders. He gave several examples that supported his argument. He questioned whether it is right for companies to avoid increasing the prices of goods to contribute to the social good of curbing inflation or that they employ the unemployed in a move to reduce poverty or that they set aside a huge amount of their profits to minimise pollution contrary to the business objectives. He argued that such measures would turn companies’ executives into civil servants.
Corporate Social Responsibility and ethical business practices are considered strategic business moves in the contemporary world. This is because they contribute positively to the company’s reputation and the public is willing to buy goods from a company that considers their needs. Ignoring social and environmental issues can be damaging to companies in the current times. Companies that pollute the environment risk poisoning the public who are discouraged from buying goods from them. Furthermore, companies that raise the prices of goods to increase their profits may end up losing their customers to their competitors. Finally, companies that exploit their workers experience high employee turnover rates and increased training costs. However, the current globalised ...Download file to see next pagesRead More
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