Chapter 3 Business Ethics Stakeholders Corporate Strategy and Value Creation
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Describe the four major trends affecting business
1. First, few people today argue that we need more government planning and control of private business
2. Second, The world has seen a steady liberalization of political institutions as well. The fall of communism, the pressure of market reform in countries as different as Japan and Indonesia
3. Third, over the last few decades we have learned that we need to take better care of our environment.
4. Finally, Economic deregulation, political Liberalization, and environmental stewardship are all fueled by a fourth one: advances in information technology
The idea of business with shareholders at the center -Is inherently resistant to change. It puts shareholders' interests above those of customers, suppliers, employees, and others, as if their various stakes in the company must conflict with each other.
Managerial Capitalism (the dominant model)
What is a potential problem with the managerial view?
> Fail to look to look externally for new sources of growth and innovation
> Concerns of customers and employees are often traded off for the interest of the shareholders
what is the “separation fallacy”?
Suggest that business rely on separating business decisions from ethical decisions
Based on the article, what was Milton Friedman opposed to related to “corporate social responsibility”? Why?
Milton Friedman was opposed to Corporate executives ( the agent of stockholders) to have to engage in Social Responsibility. He believed the corporation was not equipped to understand the whole dynamics being social responsible ( imposing taxes on employees, stockholders, and consumers to engage in social responsibility was the job of a political process, which he related to the already established government.
What is Friedman’s view on an individual proprietor who devotes a portion of his firm’s resources to social purposes? What is the basis for Friedman’s view on this?
Friedman's view on the individual proprietor who devotes a portion of his firm's resources to social purposes was understood because it was his or her money that they could use for whatever social contribution they wanted. He also mentioned, although, the small proprietor may impose taxes on employees and customer, it was on a smaller scale
Freidman notes that it may well be in the long-run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government.” How can this be consistent with Friedman’s focus on maximizing shareholder returns
Friedman believe that it would benefit the shareholders by making it easier for them to attract desirable employees, reduce wage bill or lessen losses from sabotage, and be able to make donations to lessen the taxes of the corporation, which can be beneficial to the shareholders
Some have criticized Friedman on the grounds that his view justifies anything that will lead to the maximization of profits, including acting immorally or illegally if the manager can get away with it. Do you agree with this criticism? Why or why not?
I disagree with the criticism that Friedman will justify maximizing profits regardless if the firm is acting immoral or illegal. He clearly states that it is only one social responsibility of a firm and that is to maximize the profits as long as in follows the laws and stays away from deception.
In the Wicks text, the authors note that: “In fact, we describe Friedman as an early stakeholder theorist.” Explain their rationale for this view. Do you agree?
The authors rationale as friedman being an early stakeholder theorist because Friedman believe in supporting the stakeholders would be in the best interest of the firm as long as it stayed within the rules of the game. The authors believe Friedman would agree because he believe that paying attention to stakeholders is important and to get them actively working together to maximize shareholder value. I agree to a certain extent. I believe Friedman would agree with involving all the stakeholders, but at what extent? He felt it was no way to measure the extent of involvement a particular corporation should contribute.
Review the scenario on p 92 regarding an American pesticide manufacturer considering doing business in another country. What is your view on this dilemma?
1. Pesticides were banned in the U.S, because the rest to human health
2. Countries they would be selling don't have a similar ban in place, so sales would not be illegal
3. Most U.S approved pesticides can do harm to people and the environment if not used properly in dosages
4. Field studies show a high illiteracy rates, poor labeling and education about safe use and weak safety precautions by end users, proper precautions would really be observed.
My view on this would be to educate the people on the proper use of the product. Have a quality control specialist and business developer assist them understanding to get the best yields from the product. Become strategic partners and invest in the production process
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