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Case study excel document
My paper:
Business Obligation
Tara’s move to the fast
Case study excel document
My paper:
Business Obligation
Tara’s move to the fast-changing and evolving world of the rapidly increasing start-up shows her willingness to take on new challenges and make strategic decisions. Upon Tara’s taking the seat on the board, the board of directors had numerous heated arguments about the organization’s duties. The heart of the conversation centres on contrasting views: some believe that all and only the company’s goal is to make the most profits for all shareholders; others assert that the company’s goal should be broader to encompass all stakeholders, including the community. There are various ethical issues that contribute to the complexity of this ethical issue. It is essential to understand whether Milton Friedman’s 1970 perspective on a business being solely responsible for generating profits holds water or whether such still applies to date as advocated by the Business Roundtable. Thus, this memo gives some ethical positions regarding this issue that CEO Tara Richmond can use to move forward, as they correspond to the internal organization’s values and social expectations.
An influential statement came from a distinguished Nobel laureate economist, Milton Friedman, in his 1970 The New York Times, maintaining that the sole company’s moral duty is maximising profits. At the centre of this argument lies the assertion that corporations should maximize return on investment for their owners while avoiding unlawful practices. Friedman was an unwavering proponent of the profit-first strategy rooted in the fundamental principles of capitalist economies that guarantee national wealth. Friedman highlighted the basic obligation that a firm owes its shareholders to maximize its returns, adding that this improves the profitability of organizations and augments national output and employment within economies (Shepherd, 2020). He even argues that there is harmony between an ethic imperative and fundamental capitalism principles, which state that pursuing individual gains translates into collective societal benefits.
Friedman’s perspective limits corporate responsibility to only the pursuit of business success and within the confines of the law. Considering only corporate obligations such as environmental protection and employees’ wellbeing becomes the second priority. Critics argue that by declaring profit maximization as the only ethical duty, Friedman ignores corporate action’s social and ethical aspects. Critics have argued that this profit-driven attitude is likely to overlook that companies are part and parcel of society (de Los Reyes, 2022). Hence, the argument is that more is needed to define a company’s ethics only regarding its financial success and profitability, thereby contradicting the belief that profitability amounts to an ethical business.
The Business Roundtable opposes Milton Friedman’s narrow concern for shareholder wealth, a group of Fortune 500 company CEOs with a broader vision of corporate social responsibility. These influential leaders have recently suggested that while profitability remains critical, corporations must consider more general stakeholder interests when determining corporate ethics. The Business Roundtable challenges Friedman’s stance, which states that even though businesses are separate from other stakeholders, there is interdependency (Clarke, 2020). Critics claim that a narrow perspective on shareholder value ignores the wider implications of corporate decision-making for society and the environment. Proponents of corporate social responsibility argue that businesses must consider matters that affect society, such as environmental sustainability, fair labour practices, and community health. This wider view concurs with increasing support for monetarily determining a corporation’s success in terms of beneficial influence on society.
Beyond the business roundtable, various perspectives regarding business ethics represent a developmental change in business responsibilities. Supporters of the mixed model believe that combining financial objectives and social responsibility follows ethical standards and boosts lasting profitability, contradicting the traditional separation of business success and ethical conduct. Concurrently, supporters of stakeholder theory argue that companies should act ethically to give equal importance towards the interests of different parties instead of relying on shareholder primacy. This all-around aspect acknowledges the complex intertwinements between the organizations and employees, customers, communities, and the environment (Ramanna, 2020). These different views confirm how dynamic corporate ethics are and how these dynamics relate to fundamental changes in the public consciousness that call on business leaders to consider the interests of current stakeholders and the worldwide implications of what companies decide.
It is essential to take into account the ethical problem of employee welfare, a worrying issue that covers such aspects as paying proper wages, conditions, and wellbeing at large in contemporary corporations. Under Milton Friedman’s notions, addressing employees’ welfare mainly means making profits and paying as little as possible to maintain employee productivity, thus maximizing the amount of money that goes into shareholders’ pockets. On the other hand, The Business Roundtable calls for a wider approach to ethics, arguing that companies are obligated to provide safe working conditions and consider employee prosperity and legal requirements (Clarke, 2020). This refers to paying competitive wages, creating favourable work conditions, offering development opportunities, and being aware of employees’ emotional and social wellness. The business roundtable’s position supports corporate responsibility as more than just making profits by considering social and stakeholder concerns.
The essence of this memo is the fundamental controversy between Milton Friedman’s profit-oriented model and the Business Roundtable approach that emphasizes the importance of corporate ethics based on stakeholders. In this regard, some critics have faulted Friedman’s focus on corporate responsibility, emphasizing profit maximization within the legal boundaries, arguing that such an approach may overlook bigger societal and ethical considerations. However, the Business Roundtable prefers a more holistic perspective that acknowledges the linkages between businesses, stakeholders, and the health of society. As Tara Richmond deliberates, these suggestions signify the need for equilibrium in the wake of conflicting views. A key aspect would be an updated definition of corporate social responsibility that considers the company’s values, long-term sustainability, and stakeholder relationships in line with current societal expectations. The company will need to strike the right balance in pursuit of profit-motived goals while considering broader considerations of business ethics. Ultimately, this will position them strategically to thrive successfully and positively impact society within the evolving landscape of the modern business ethics environment.
For the guidance of CEO Tara Richmond, the recommendations emphasize a holistic approach that embraces the company’s vision of long-term sustainability and incorporates stakeholder partnership relationships. The first recommendation underlines the reevaluation of core values that should unite with current ethics to inspire a corporate culture founded on moral choices. The company takes the perspective of a conscious corporate citizen; it advocates long-term sustainability by implementing environmental stewardship and socially responsible initiatives. Building good relations with stakeholders is important, characterized by open communication, participation with stakeholders and their inclusion in decision-making activities (Liu & Yin, 2020). These recommendations encourage a more balanced approach and urge companies to adopt a revamped understanding of their responsibility commensurate with the current expectations. Through these steps, the company would survive in a socially conscious market niche that would benefit society and the company itself.
This memo entails the conflict between Milton Friedman’s profit-driven ethics and the Business Roundtable stakeholder-oriented standpoint. The paper also stressed the changing nature of moral considerations in business and the implications for employee welfare and environmental stewardship issues. This recommendation advises CEO Tara Richmond to balance the corporate culture, long-term sustainability, and stakeholders’ relations. It highlights the need for a modern perspective on corporate responsibility, which is now in line with the public’s perception. A thought-out and harmonious ethical approach to business has been formed that considers the interests of shareholders, stakeholders, and society, which is important for business functioning. Indeed, Richmond’s CEO will make informed selections consistent with the company’s values towards long-lasting accomplishment and positive impact on society.
References
Clarke, T. (2020). The Contest on Corporate Purpose: Why Lynn Stout was Right and Milton Friedman was Wrong. Accounting, Economics, and Law: A Convivium, 10(3), 20200145. https://doi.org/10.1515/ael-2020-0145
de Los Reyes, G. (2022). The All-Stakeholders-Considered Case for Corporate Beneficence. Journal of Business Ethics, 1-19. https://link.springer.com/article/10.1007/s10551-022-05224-9
Liu, Y., & Yin, J. (2020). Stakeholder relationships and organizational resilience. Management and Organization Review, 16(5), 986-990. https://doi.org/10.1017/mor.2020.58
Ramanna, K. (2020). Friedman at 50: Is it still the social responsibility of business to increase profits?. California Management Review, 62(3), 28-41. https://doi.org/10.1177/0008125620914994
Shepherd, G. (2020). Not Just Profits: The Duty of Corporate Leaders to the Public, Not Just Shareholders. U. Pa. J. Bus. L., 23, 823. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/upjlel23§ion=2
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