Ethics and Social Responsibilities Paper
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Ethics and Social Responsibilities.
a. Ethics and social responsibility play important roles in today's business world and are impacted by movement regulations. For your paper, select one of the following statements:
1) "Since the goal of the public corporation is to maximize shareholder wealth, management should take any action necessary to achieve this goal so long as no law is violated."
2) "It is acceptable to sell products banned in the United States in other countries (i.e., where permitted by other countries due to differences in national policies)."
3) "Strict government regulations necessary to make companies behave ethically."
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1) "Since the goal of the public corporation is to maximize shareholder wealth, management should take any action necessary to achieve this goal so long as no law is violated."
Profit maximization should not be the decision criterion of the management. Instead it should be wealth maximization, which is based on the maximization of cash flows. Cash flows are more important to business as it leads to wealth maximization. The profit maximization has certain pitfalls as criterions, which are as follows:
- It is Vague
- It Ignores the Timing of Returns
- It Ignores Risk
Moreover, in new business environment profit maximization is regarded as
- Unrealistic
- Difficult
- Inappropriate
- Immoral.
Benefits of wealth maximization as a criterion
- Maximizes the net present value of a course of action to shareholders.
- Accounts for the timing and risk of the expected benefits.
- Meets the fundamental objective-maximize the market value of the firm's shares.
Importance of Societal responsibility and other objectives:
Some of the variables considered to be considered by the management are:
1. Environment
2. Community relations
3. Employee relations
4. Share holders
3. Customer relations
4. Non U.S. stakeholders
5. Minorities and Women
Thus Besides wealth maximization it should also satisfy other stakeholders as the organization is taking the resources from them. It can have following additional objectives:
- Environment looks at positive programs in place such as pollution reduction, recycling, and energy-saving measures; as well as negative measures such as level of pollutants, EPA citations, fines, lawsuits, and other measures.
- Community relations looks at philanthropy, any foundation the company has, community service projects, educational outreach, scholarships, employee volunteerism, and so forth.
- Employee relations looks at wages relative to the industry, benefits paid, family-friendly policies, parental leave; team management, employee empowerment, and so forth.
- Minorities and Women look at percent of minority and women among employees, managers, and board members; any EEOC complaints; diversity programs in place; lawsuits, and so forth.
- Customer relations might include quality management ...
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