Page 57 - Business Principles and Management

Unit 1

refers to the duty of a business to contribute to the well-being of society. Because
businesses depend on society for resources, opportunities, and rights, they have
an obligation to the communities in which they operate.
Stakeholders are any individuals or groups that are affected by the firm’s
actions, such as owners, customers, suppliers, employees, creditors, government,
and the public. Stakeholders expect a business to be responsible and responsive
to their interests. Such responsibility may mean a variety of things. Examples in-
clude donating money to flood victims, sponsoring an exhibition on Hindu art at a
local museum, providing college scholarships to needy students, training gang mem-
bers in job-related skills, and setting up day-care centers for employees’ children.
Stakeholders usually believe that a business has the resources to contribute to
a community’s well-being. Also, good deeds translate into favorable publicity for
the business, which, in turn, means more sales and profits. The founders of Ben
and Jerry’s, the ice cream makers, for example, commit themselves to buying
expensive milk from hormone-free Vermont dairy farms and giving 7 percent of
pretax profits to charity. Such actions endear them to the residents of Vermont,
where their operations are based.
Milton Friedman, a renowned economist, once said, “The business of business
is business.” People who follow his view believe that if a business uses some of its
profits for social causes rather than using all of its profits to grow the business, the
company will not remain very profitable. Thus, workers will get lower wages, cus-
tomers will pay higher prices, and the owners will make less profit. Questions are
also raised about the ability of a business to solve social problems. Does a manager
know how to solve drug abuse? Should a business be responsible for promoting
sporting events in the community? Are these not roles for the government or others
to perform?
Despite these serious concerns, it is now widely recognized that business has
an important responsibility to its stakeholders. Business has also realized that
by getting involved socially, it advances its own interests. Enhancing goodwill
in the community reduces government’s desire to regulate the business.
Some businesses review their social programs regularly. The reviews show
what the business is doing to fulfill its social responsibilities, its success in
accomplishing its goals, and its plans for pursuing future activities.
The conduct of businesses is being increasingly
and closely examined by various independent groups
known as nongovernmental organizations (NGOs).
Examples of such organizations are the American
Civil Liberties Union and the Sierra Club. They spe-
cialize in particular issues, such as workplace discrim-
Businesses are concerned about social respon-
ination or environmental protection. NGOs influence
sibility. The organization, Business for Social
businesses through lobbying, publicity, and pressure
Responsibility (BSR), helps companies demonstrate
tactics to alter their activities.
their respect for ethical values, people, communi-
ties, and the environment. Point your browser to
www.thomsonedu.com/school/bpmxtra. Go to the THE FUTURE
BSR Issue Brief to view a list of corporate social
Given the fast pace of change in the world today,
responsibility issues. Choose two topics, summarize
society and business will face different issues in the
the major issues related to them, and list at least
future. Although it is difficult to predict the future,
three reasons businesses should practice social
current trends provide hints of what may be in store
responsibility. Write a short paragraph describing
in the years to come.
how you are personally affected by corporations
Various economic and social data provide an
for whom social responsibility is a priority.
in-depth picture of changes occurring in American
society. The racial and ethnic mix of the labor
www.thomsonedu.com/school/bpmxtra
force will continue to change. The Internet is
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