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Business ethics Exam 100% Correct!!
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Business ethics Exam 100% Correct!!
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Business ethics Exam 100% Correct!!Milton Friedman's Philosophy on business ethics (quote) - 4 points (including one criticism) -
ANSWER"The question is, do corporate executives, provided they stay withon the law, have
responsibilities in their buisness activities other than to make as much money as possible for their
stockholders? My answer is no, they do not."
Friedman argued thst the only purpose of a business is to make money. He was reacting against the
idea the buisnesses have social responsibilities to improve their workers' lives or help the
communities they operate in. For friedman, this was socialism, a system which he argued made
capitalism less effective and restricted the rights of an individual to improve their lives. The best way
was to improve the lives of people and the community, was for a buisness to focus on making profit.
Friedman argued that the only escape from extreme poverty, is capitalism and largely free trade.
Capitalism gives everyone the freedom to make as much profit as possible, and for those who are
worst off, they can be given employment working for large companies. Evidence which supports
Freidman's case, is that the percentage of the world in extreme poverty dropped from 70% in 1960
to 17% in 2012 - thus, as capitalism has developed further and further in the past 50 years, poverty is
getting smaller.
The problem for Friedman, is that he thinks market freedom is good, yet freedom under capitalism
also leads to monopolies (eg: Disney in the children's entertainment industry has made it very
difficult for smaller companies to compete and make profit). Monopolies actually end up
undermining freedom, and thus they won't lead to improved standards of living or less poverty.
Successful corporations will use their money to rig the market in their favour.
Corporate Social Responsibility (CSR) - ANSWERthe idea that a business (corporation) has a duty to
serve society in general (including the community they live and work in, as well as their responsibility
to look after the environment), not just the financial interest of stockholders.
A business has a responsibility to its stakeholders- these Include (but are not limited to)
shareholders, employees, the local community community, and wider society (including the
environment).
Why do businesses take on corporate social responsibility (CSR) (3 reasons) - ANSWER-businesses
might take on CSR because they think these will improve their image with customers, or with a
certain type of investor. Thousands of investors only put their money into 'ethical' businesses- the
FTSE4Good index series, provides information for investors on businesses that demonstrate 'strong
environmental, social, and governance practices'. Baggini says that growth of CSR is linked to the fact
that businesses had to respond to consumer concerns about where their goods came from- in
companies such as MacDonalds and Burger King, for example.
, -others may take on responsibilities because they fear that if they fail to do so, governments will
impose stricter social responsibilities and regulations on them. Newspaper businesses may agree to
restrict their intrusion into the lives of vulnerable celebrities, out of fear of government legislation
banning such intrusion altogether.
-others may follow it because they feel it is the genuinely right, ethical thing to do- the body shop for
example. Google also claim to follow CSR out of genuine concern for the environment.
Stakeholders + examples + stakeholder responsibilities - ANSWERAll the people who stand to gain or
lose by the policies and activities of a business, and whose concerns the business needs to address.
Crane and Matten define a stakeholder as "an individual or group which is either harmed by, or
benefits from the corporation, OR whose rights can be violated, or have to be respected, by the
corporation".
Examples include: competitors, the government, customers, employees, the management team,
local communities, suppliers, and shareholders.
Stakeholder responsibilities are most likely to be obligations that businesses cannot reject without
serious reputational (related to reputation) damage, rather than philanthropic responsibilities, which
go beyond these basic expectations.
Often, it is difficult to meet the needs of all stakeholders in a situation- if a company wants to shut
down its steel works because steel works in the UK have become unprofitable, shareholders would
likely support the decision, knowing that their investments would otherwise be affected, but
employees and steelworks may react negatively if they lose their jobs.
How does Google follow CSR? - ANSWERSo far, the Google Corporation has gone to great lengths to
establish itself as a socially conscious brand. For example, their Google Green initiative saw the
company reducing their energy consumption by up to 50% in their data centers alone.
Google decided to switch off the lights in areas that were not in use, using renewable energy where
possible, and promoting recycling among its employees.
How do Starbucks follow CSR? (Or follow GEIGB) - ANSWERStarbucks has always prioritised social
responsibility. They have partnered with 'Ethos Water' to provide clean drinking water to over 1
billion people in need.
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