BUSINESS ETHICS ESSAY Being marked on quality of communication, demonstrated kno
ID: 365371 • Letter: B
Question
BUSINESS ETHICS ESSAY
Being marked on quality of communication, demonstrated knowledge and reasoning
Explain the following passage: “Under the proper assumptions profit maximization is indeed efficient in the sense that it can achieve as high a level of satisfaction as possible for any one consumer without using more resources than society is endowed with.” Do you agree with this statement? What are its implications? What are the limitations of this position? Use concrete examples to support your position.
Minimum 5 paragraph answer
Explanation / Answer
The for profit company is an economic institution which has a social service as well as profit making function. many company’s singular focus on profits will be likely to induce them to take shortcuts that could result in harm to others through product defects, environmental spoilage, and firm failures, which hurt not only stockholders, but employees, creditors, and all who breathe the air and pay taxes. Focusing corporate governance solely on profit maximization should not injure other corporate constituencies or interests affected by corporate conduct. Companies can benefit society by increasing societal wealth. If companies maximize profit which makes their investors better off. And those investors can spend that wealth not only on their own families, but in buying goods and services, increasing demand and the potential for others to get jobs and become wealthier.
The responsibility is to make as much money as possible while conforming to the basic rules of society both in terms of law and ethical custom. So for profit corporations should therefore stick to trying to make money within the “rules of the game” set by government. It was government’s job to set those rules in the public interest and to put in place what regulatory standards were needed to protect those affected by corporate profit seeking. There will be a win-win situation for everyone and everyone would be better off because it left corporations better positioned to do what they do best to improve social welfare. Set the boundaries for corporate conduct by regulating externality risk in the public interest.
Corporations breathe the air, drink the water, and live on the land affected by the their operations. So they must take care of society while maximizing its profit. Corporations should have to consider the best interests of all corporate constituencies and societies as a whole when making decisions.
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