For company leaders governing a company, BRIEFLY answer the following questions:

Question

For company leaders governing a company, BRIEFLY answer the following questions:

1.     Is profit the only important goal of a business? What are others?

2.      Stockholders are only one group of stakeholders. Who are the other stakeholders important inside the organization?

3.      Who are the other stakeholders important outside the organization?

4.      What does the successful manager need to know about ethics and values?

5.      Is being socially responsible really necessary? Explain the 2 viewpoints.

6.      How can society trust that a company is doing the right thing?

Explanation / Answer

1. Profit is an important goal of a business as it ensures the survival of the company. However, apart from profit, a company should also be driven by a higher goals. Some example could be helping the society, bringing about technology innovation, bringing operational excellence within an industry, etc. These are usually the vision and mission of the company/business and are equally (if not more) important when compared to profit. These visions and mission create a sustainable ecosystem within the business. In a nutshell other important goals are vision, mission, social responsibility and overall objective of the business are as important as profit.

2. Stakeholders are the group of people who are impacted by the decision and execution of a business. Stockholders are the type of people are mostly impacted financially by a company’s decision. On the other hand the other stakeholders are the employees, suppliers, partners, customers and the community. Among these, the important internal stakeholders are employees, board of directors, volunteers, and donors/investors.

3. External stakeholders of a business are customers, suppliers, vendors and the community. They are equally important for the success or failure of a company.

4. A successful manager needs to know that while profit is important for business, it is not the only objective. It is equally important as to how we make the profit. A successful manager not only achieves financial growth and success for the organization but does that in an ethical and responsible way. Ethics and values are often intertwined. However, values are often derived from ethical standpoint and how we practice these values forms a level of ethical standards followed within the organization. A successful manager should be able to demonstrate ethical practices that align with company’s values and beliefs.

5. In today’s business world, being socially responsible is extremely important. This is because businesses are not done in isolation but are a continuous transaction between suppliers, vendors, customers, and other stakeholders. Naturally, a business cannot be sustainable for a long term unless it takes into consideration the good of all the stakeholders. The two main viewpoints on social responsibility are

Businesses should be left alone to produce goods and services that makes them profit. This way the businesses produce profitable goods and services that is needed for the society autonomously and even though they chase profit, they serve the need of the hour and helps the society in general. This viewpoint states that society will benefit when businesses are left alone.

Businesses not only need to make profit but need to act in a socially responsible way as it owes its duty to the society. Managers with this viewpoint believe that they have the responsibility to not only the stakeholders but also to the community as a whole.

6. There is no direct way for a society to trust a company is doing the right thing. The only way this trust can be built is through action of the company. The decisions that a company makes in order to help the society can be seen. Such actions help build trust on the company within the community. Similarly, companies which act negligently are also often exposed and their trust is lost. Thus the only way a society can trust a company is doing the right thing is through the actions of the company.

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