Profit Maximization & Social Welfare
Not what you're looking for?
Think of a company with which you are familiar. What issues of social responsibility must that company address? What consequences might company face if those issues are not addressed?
Purchase this Solution
Solution Summary
According to this author there is an important debate going on between the issues of social welfare and profit maximization. While the managerial appproach of profit maximization is to achieve the highest possible profits, the social welfare approach illustrates a common goods approach; on the one hand, managerial issues are constrained and objective: stakeholders versus society; on the other hand, the reality proves a rather multidimensional approach: stakeholders versus society versus culture versus religion versus diversity versus globalization and many other unpredictable factors.
Solution Preview
According to Shah (2010) there is an important debate regarding the issues of profit maximization and social welfare. According to this author, maximizing profits illustrates the greatest commitment to shareholder and stakeholders. In this particular theory, according to the author, the managerial staff is only committed to maximize the bottom line in terms of profits: a means to an end in order to achieve the highest possible profits. On the other hand, according to this author, society's welfare illustrates a common goods approach; in this particular approach managerial staff attempts to achieve a balance between the bottom-line and social welfare of the society and employees.
According to Shah (2010) these two theories assume that managerial issues are constrained and objective; stakeholders versus society; on the other hand, the reality proves a rather multidimensional reality; stakeholders versus society versus culture versus religion versus diversity versus globalization versus many other unpredictable factors; further, both of these theories appear to be better suited for larger organizations; small businesses encounter more immediate issues such as revenue and cash flow rather than managerial ethics.
However, according to Shah (2010) there is more to the issue of ethics. According to this author, given the fact that both competing theories consider some sort of managerial ...
Purchase this Solution
Free BrainMass Quizzes
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Lean your Process
This quiz will help you understand the basic concepts of Lean.