Milton Friedmans Statement about Business - Coursework Example

ment: There is one, and only one, responsibility of business – to use its resources and engage in activities designed to increase its profits solong as it stays within the rules of the game’ (Milton Friedman, 1912-2006) Introduction to Milton Friedman’s Statement Milton Friedman’s statement holds true for the business as a whole but the manner in which he has explained the statement suggests that business has to do a lot of social service work apart from the usual profit earning exercises that it usually undertakes on a consistent basis. Because of this, the aspect of Corporate Social Responsibility has come about in the fold. Corporate Social Responsibility is internal to an organization; it dictates the manner in which it has to plan about the courses of action it has to carry out with respect to the society. This term basically deals with the organization’s set of operations that it carries out for the welfare of the society while existing within itself. It helps the humanity in more than one ways, to train and educate them and to ponder upon issues, which can really change the fate of coming civilizations. It all comes under this heading of Corporate Social Responsibility. (Cannon, 1994) Role of Government in the Corporate Undertakings According to Milton Friedman’s statement, the rationale is that the Government must play its role in harnessing the skills attached with the corporate sector in finding out the better means in which it can benefit the society. For that certain loans and grants can also be fixed for a certain company depending on its market level in the business world. Extensive research has found that corporate responsibility is becoming an essential part of any company’s day-to-day undertakings. Thus, the responsibility played by the Government as well as the citizens in this regard should be quite eloquent and expressive. Their voice is given due value by the company and it does just about everything to get more and more customers and consumers which in turn excites it to search for better means to get the very same people. This, in turn, attracts the company to sponsor big events and sports galas, competitions as well as come towards social welfare works, which really benefits the society in more than one ways. Mr. Higgins, who completed a research on the local community, was not that enthusiastic about the role played by these companies in the social sector. People, according to him, were of the view that these companies filled in social responsibilities to a certain limit and not beyond that extent where other large organizations jumped in and took the lead. (Husted, 2006) For the small business owner, CSR means a different thing altogether. He sees it in a different attitude encompassing his own business and its responsibilities fulfilled for the betterment of the society or let alone none at all. Role of Corporate Social Responsibility in the Bigger Contexts In the same context, Corporate Social Responsibility helps as a survival agent for any business in the new atmosphere of economy. By that it means whenever the economic climate changes, it favors the CSR that has been initiated by a business with respect to its role in fulfillment of the social responsibilities. (Lunheim, 2003) This can be regarded as an advantage of CSR whereby the business gets a slight edge as opposed to the other ones in the corporate world who have not actually started with the idea of investing with consideration to the society in the forms of different sponsors, helping of non-Governmental organizations and the like. The major disadvantage that CSR possesses within its fold is that it does not have any profits in the short-term duration but hope can certainly be placed on the longer ones. This can be regarded as a short-term con, which can banish with the changing times of the business situation. The basic purpose of having any business is to earn a profit (or revenue); however this is not stated as the mission or vision statement of the organization ever. The organization strives to bring value to its customers, stakeholders and create an encouraging environment for the employees and workers. The Learning Avenue of Business The aspect of learning is tied in closely with the organization since it has to seek future business activities, tasks and processes in line with the already completed research and surveys. Learning has to be the basic outcome of its activities and on those very learning principles, does the business survive. Now the imperative point to understand here is the fact that learning can not only be at the highest level, rather the knowledge management can even take place at the middle cadre and the special trainings help at doing their best as far as the lower level management is concerned. An organization which can learn can understand what are its responsibilities with regards to the society, the environment, its stakeholders and customers, its functions and different processes which have to be looked down up at with a legal and ethical perspective. This means that the organization emancipates its working methodologies in line with its already set values and moral principles. Moreover, it knows what are its obligations and compulsions towards all the above-mentioned. (Freeman, 1984) The organization is always willing and eager to learn from its mistakes, ready to bring in newer and fresh processes within its folds and always encouraging its stakeholders and employees to invest more money and time, respectively. Management Concerns and Scenarios Managing an organization is also an important function which comes under the learning principles. It has case studies and best case scenarios to look up to whenever there is a problem or trouble at hand and it knows who the right person is to contact whenever there is some discrepancy within the system. Add to that the organization tries to keep its contacts, no matter in which capacity they are, at a maximal point and always keeps on increasing so as to become a socially active player within the relevant industry. The management aspect also stems from the fact that its knowledge base is intact and knows what is required of it. This knowledge base has the role of continuously improving the systems and working methodologies. It also has the best available middle management employees who know the technical basis of running the organization and whose potential can largely benefit the sound workings of the company. (Sims, 2003) Thus it is very important to understand that an organization which is willing to place the knowledge base at level with the top management when it comes to calling the shots (taking the decisions), is willing to experiment in a very proactive manner; one that can reap rich dividends in the near future. Learning within an organization can also be an intrinsic entity when there are special trainings and in house courses and seminars for the employees and stakeholders. (Rudman, 2003) By this process, these people come to know of the industry norms and what new activities are taking place in the world of relevant business paradigms. Also it helps to improve the understanding and knowledge levels of these people who are tied in closely with the very organization in the first place. Responsibility of Business Units in CSR Moving on further with the discussion at hand regarding the responsibility of business units, we see that the concept of Corporate Social Responsibility can be applied to a business in a very innovative fashion as well. (Berkhout, 2005) The company can invest in the social arena with much return in mind, not in the short-term but of course in the long run. Such is the example of Shell, which has introduced education programs for children all over the globe thus acting as a consumer-friendly company. People in return like to buy products of Shell because it gives them the pleasure that some proportion of the money earned by Shell would be spent on its different social and literary programs. Culturally, CSR can prove to be a very vital agent that can really highlight the problem areas of different people within a particular society and then go about correcting and reforming them in the best manner possible with the aid of funds and grants. This is the basic way in which CSR has been acting to do something for the sake of community welfare. (Dunning, 2003) The companies from the economic aspects can earn a due share with arranging all sorts of cultural activities in the name of charity that will benefit their cause and help the poor and needy. Example of TESCO Tesco, which is a supermarket franchise, has been involved in Corporate Social Commitment ever since 1988. It formed a new team that had the mission of raising about 2 million pounds for Macmillan nurses, which was termed as the charity of that particular year. Thus, Tesco did its part in the field of community for the people and the Macmillan nurses in specific. Same is the case with Diageo, which is an international consumer goods company that highlights on the responsibilities of the corporate citizenship in its code of conduct. This policy encourages the community welfare work to its fullest from the company’s side. It has set up different programs in this very respect, one such of them is the Skills for Life program that gives the people a chance to come and discover their secret talent, attain new skills and know about themselves. Their Bartender project helps provide training and job experience for unemployed young men in Brazil. This is all community welfare work on the part of Diageo. Role of Corporal Behavior in the Related Settings Furthermore, corporal behavior is one, which has taken its roots from the dealings of the business world. As such it has no direct or indirect contact with the social norms of human life but when we talk about Corporate Social Responsibility, this mixture of both these behaviors comes in the frame. (Zahra, 1989) When the corporal mannerisms interact with the society and its different manners and ways whereby it helps the society in various means, call it culturally or from the community point of view then this merger comes into reckoning. The society gains quite a bit from the corporal interaction and thus gives back much in return as well. It is sort of a symbiotic relationship between the two where each benefits the other one. The business company, by helping the society in terms of different reforms and programs, gains a lot for the company’s overall standing between its competitors and all. The society, on the other hand, gets to make quite a lot as the business entity restructures the different people who are either illiterate or need help or are in distress. There are obviously many controversies whenever anything is done which involves the business doing something out of its actual set approach. The example here can be given of the company Enron for which the critics had said that considering the personal relationship between the CEO Kenneth Lay and the US President George Bush, the company would be rather listening and applying to Vice President’s energy policy process than any other single interest taking birth from within the company itself. Such kind of controversies can erupt anytime within any company that has set its mission to go about the process of carrying the Corporate Social Responsibility. Much has to be tackled whilst hundreds of obstacles come. CSR movement needs caution while promoting their achievements because there are many critics around who can question the legitimacy of a particular accomplishment and can sabotage it altogether. CSR drives Benefits Thus it is to suffice to suggest that CSR can really get the best out of business companies and industries. When they find out that their market is in direct proportion to what they do in the social sector, they invest more and more which ultimately profits the society and the needy in particular. The citizens, no, matter what they feel about the corporal responsibilities they own to the society, must agree in principle that these business companies can really get the best out of themselves and help the society in more than one ways. Their commitment is loyal because this is the golden tenet of business, never to lie with the customer so how can they tell untruths and fool around people with false welfare works and the like. Corporate Social Responsibility can regulate the workings of the company and serve as a welfare organization for the masses of a particular society, thus boosting the market as the competition will increase between the different corporals, which will, in the long-term, only benefit the society. It would also fulfill the role due on the business companies’ part. Thus the role played by CSR with regards to the corporate world of present times is immense and cannot be denied its due place in the scheme of things. (Simmons, 2003) Example of ENRON Similarly, to quote as an example, Enron was a company that rose from nowhere to being one of the America’s top ten companies in terms of its size and employees. It employed around 21,000 workers in nearly about 40 nations of the world. This company’s name is synonymous with the bi-word for corporate irresponsibility. Enron was all at ease with the CSR reporting, environmental and community programs in the society but within years this company came down to its feet. This is the same company that boasted Fortune Magazine’s Most Innovative Company in America for six successive years. (Besser, 2002) The company had been estimating itself as a highly profitable one, one that had gained much of the market share. But all this was untrue. This image rapidly changed and saw the company hiding debts of a large sum. They were being concealed so that they did not show up on the firm’s account books. The company was also entailed in political lobbying whereby it had a large number of legislators close to the firm in one way or the other. This point should have saved the company from its changing image in the global market but it didn’t happen that way. People started inquiring about the degree and appropriateness of such closeness between the business and the politicians. They also asked how the company had resisted the political influence for so long. Also, the firm’s accountants were found involved in the slicing of Enron’s accounts’ documents. These documents listed a fair scale of involvement. Enron could have prevented these problems much before it actually encountered them. The company should have avoided political lobbying at all costs and should also have invested in the social sector as its primary duty to the society. The top heads of the company were more towards the political framework of the country, which really hampered the progress of Enron as a business unit. People started to question all sorts of claims made by the company that it was the most profitable one. Much was needed to be answered when the accounts’ documents were found implicated by the accountants of the company. The company, speaking from an ethical point of view, should have concentrated more on the welfare of its workers and the society but its entailment with the politics really ruined its status worldwide and nearly pulled its name out of the top American companies. (Kline, 2005) It ought to have followed the code of ethics that are set to be followed by every business company. The Government regulation body should have imposed certain restrictions on the company’s involvement with the political set up. It could also have made it obligatory for the company to follow the norms like the other business giants do, failing whereby they could be imposed upon certain sanctions legally as well as otherwise. CSR Ethically! Speaking from a moral perspective, it is duty bound for any business that exists to satisfy a customer through its products and/or services to be responsive towards their needs and defer the financial sides concerned with the company. It is important though not to ignore the monetary aspect but to remain in the business in the first place for the ones the business is being done, it is essential to situate the resources onto them and then move on forward expanding the market share and the like. There are a lot of companies that have continued to divest the consumers of their basic rights in the name of achieving certain financial ratios. However doing so does mean putting the business’s long term strategy at risk as the customers and the remaining stakeholders would not appreciate the fact that the enterprise does not value their concerns rather goes after the financial side. The need and thus the opportunity in the business world of present times is to get ourselves noticed and make the companies realize of their responsibilities that they owe to the customers. It is imperative on the part of the respective company’s leadership to understand that customers alone could shape up the future and visionary characteristics of the company and thus they have to be focused very precisely. Ignoring them even for a moment could be hazardous to the prospects of a business concern. (Siegel, 2006) Conclusion Thus Milton Friedman’s statement suggests that the corporations of present times need to be on their toes as far as provision of information and correct data is concerned. (Frankental, 2001) For this, there are specialized public relations departments set up within the organizations so that they could look at the reactive as well as the proactive side. The reactive side looks to solve the problems which arise in the aftermath of an event or a sudden situation which has caused uproar in the relevant circles while the proactive side is ever-vigilant and always on the move to remain abreast of the changing global business scenario. Friedman’s statement looks to adjust the business frame of mind as well as the ethical concerns in a spot on manner. The need of the hour on the part of the business gurus is to discern that this statement paves the way for the effective and efficient working methodologies as far as complimenting a solid CSR policy is concerned. (Lefkowitz, 2003) Maximization of profits indeed helps a business sustain at the top level but it is with a sound reputation and rapport at the highest echelon that the organization keeps making a good name for itself at all possible areas. BIBLIOGRAPHY BERKHOUT, Tom. (2005). Corporate Gains: Corporate Social Responsibility Can Be the Strategic Engine for Long-Term Corporate Profits and Responsible Social Development. Alternatives Journal, Vol. 31 BESSER, Terry L. (2002). The Conscience of Capitalism: Business Social Responsibility to Communities. Praeger CANNON, T. (1994). Corporate Responsibility. A Textbook on Business Ethics, Governance, Environment: Roles and Responsibilities. Pitman Publishing, London DUNNING, John. (2003). Making Globalization Good: The Moral Challenges of Global Capitalism. Oxford University Press FRANKENTAL, P. (2001). Corporate social responsibility – a PR invention? Corporate Communications: An International Journal, Vol. 6 FREEMAN, R E. (1984). Strategic Management: A Stakeholder Approach. Pitman Publishing HUSTED, Bryan W. (2006). Corporate Social Responsibility in the Multinational Enterprise: Strategic and Institutional Approaches. Journal of International Business Studies, Vol. 37 KLINE, John M. (2005). Ethics for International Business: Decision Making in a Global Political Economy. Routledge LEFKOWITZ, Joel. (2003). Ethics and Values in Industrial-Organizational Psychology. Lawrence Erlbaum Associates LUNHEIM, R. (2003). Operationalising corporate social responsibility. Visions of Ethical Business, FT Prentice Hall RUDMAN, Richard. (2003). Performance Planning and Review: Making Employee Appraisals Work. Allen & Unwin SIEGEL, Donald S. (2006). Three Lenses on the Multinational Enterprise: Politics, Corruption, and Corporate Social Responsibility. Journal of International Business Studies, Vol. 37 SIMMONS, Annette. (2003). When Performance Reviews Fail: Performance Management Often Conflicts with Relationship Management. Negative Feedback Doesnt Motivate; Ignoring the Subjective Element in Reviews Undermines Employee Attitudes. Heres a Proposal for an Alternative Review System That Takes into Account the Important Emotional Aspects. T&D, Vol. 57 SIMS, Ronald R. (2003). Ethics and Corporate Social Responsibility: Why Giants Fall. Praeger ZAHRA, S A. (1989). Boards of directors and corporate social responsibility performance. European Management Journal, Vol. 7, No. 2 Word Count: 3,082 Read More