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The Goal of the Firm Essay

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Below is an essay on "The Goal of the Firm" from Anti Essays, your source for research papers, essays, and term paper examples.

One of the main goals of any organization is to do their business operations in a socially responsible manner. Over time there have been differing opinions regarding a corporation's social responsibility or CSR. The main point of controversy is often on who the organization primarily seeks to serve and with what means to an end.
Milton Friedman pointed out that a business primarily seeks to maximize profits in the interest of maximizing the shareholders' wealth. In this sense the basic responsibility of a firm is to maximize profits with the fiduciary duty of safeguarding the shareholders' interests and it should overcome all environmental blockades to doing this. Milton pointed out that the only responsibility of business was to maximize shareholders' wealth, and do business in an open and free competition honestly and with no deception. Friedman pointed out that taking on the responsibility of social cost makes a business become less efficient since prices will go up in direct response to the added production cost, whereas new business activities and research are postponed since resources are diverted elsewhere. By deciding to pursue social responsibilities, a firm may compromise on their profitability and as a result cut the shareholders in the profits they receive. Therefore a firm's only responsibility is to its shareholders (Friedman, 1970). In this sense Milton only looks at the economic and the legal responsibilities of a business otherwise referred to as "Must-Dos" and "Have-Tos" by Archie Carroll.
The motives of some companies in adopting CSR plans have been questioned by various scholars. Companies such as McDonalds' have been said to only adopt CSR strategies to distract public attention from ethical questions posed by their business operations. They pursue the programs for the commercial gain of building and raising their reputation only and therefore raising their profit levels, but not able to advance the society's interest as a whole (McKibben,...

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"The Goal of the Firm". Anti Essays. 12 Dec. 2018


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The Goal of the Firm. Anti Essays. Retrieved December 12, 2018, from the World Wide Web: http://snehaedu.com/free-essays/The-Goal-Of-The-Firm-357115.html