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Milton Friedman -- a Living Economic Legend
Even those individuals who consider him to be a negative influence upon economic theory cannot deny the impact of Milton Friedman had in deflating the once-uniform confidence economists invested in Keynesian theories of macroeconomics after Keynes' theories of government spending were credited with ending the Great Depression. Unlike Keynes, who advocated sharp, short-term increases in government spending to ameliorate the effects of a recession, Friedman argued against government intervention in the economy. Friedman claimed that the forces of a free market and the Federal Reserve Bank's gradual, continuous increase in the money supply would promote economic growth and thus counter the dangers of a recession. (Silk, 2005) This was at the heart of Friedman's 1957 contributions to economics, called the "Permanent Income Hypothesis" in consumption, that suggested that the more money existed in the economy, the more individuals were willing to spend, in…… [Read More]
Milton Friedman: Journey From Past to Present
Milton Friedman, the world's famous economist was born in 1912, in a poor Jewish Immigrant family who shifted to Brooklyn in the late 1980s. After completing his public school studies, he joined utgers University in 1928 (Friedman and Friedman 1998, p.25-27).
During his early study in the field of economics, he was continuously in contact with the theorists like Mitchell, Burns and Kuznets; therefore he started taking interest on the macroeconomic issues like the business cycles and the monetary theory and was less concerned about the microeconomic issues.
Friedman was a passionate advocate of the free market economy. He made great contribution to the field of economics by writing books, journals, articles in which he presented his own theories and ideas. His theories and writings played an important role in shaping the economy. He played a role of a public intellectual; and conveyed…… [Read More]
Milton Friedman famously proposed in 1970 that the "social responsibility of business is to increase its profits," and that notion of business ethics is still prevalent today, though the debate about the subject has yet to abate. Friedman was writing in response to a growing call for increased social responsibility from businesses as the result of the strong social changes in the late 1960s, but his argument was underpinned by concepts such as social contracts and agency theory. Managers, he argued, are agents of the shareholders. Shareholders are assumed to be purely rational, and therefore are only investing for profits. They can take those profits and do whatever socially responsible things they want to do with them, but it is not the role of the manager to make those decisions for the shareholders. The role of the manager is simply to earn those products. Friedman did add the caveat…… [Read More]
This led to the rise in monetarism and the tax cuts promoted by President Reagan, the fiscal conservatism of the Volker-Greenspan Federal Reserve System, and the economic prosperity of the 1980s and 1990s (Ross, 1998).
Currently, monetarism and the importance of monetary policy in determining economic growth and stability are widely accepted. However, it is important to note that Friedman himself has cautioned against assigning to monetary policy a larger role than it can actually perform (Friedman (a), p. 99). hile admittedly, changes in money supply can affect employment and output in the short run, Friedman advised against an over reliance on the supply of money as a mechanism to stimulate investment, employment and demand to avoid unacceptable levels of inflation. Instead, he advocates, that these economic objectives are better achieved through allowing the free market to operate freely.
Biz/ed. "Milton Friedman - Theories." Accessed April 26, 2005:…… [Read More]
Friedman is considered to be one of the more influential thinkers of his time and "Milton Friedman on Economics: Selected Papers," is a collection of much of his work. Many of the enclosed papers were originally published in the Journal of Political Economy. The work opens up with his 1977 Nobel Lecture and then spans a great part of his life and career. There were some works in the collection from as early as 1948 through 1990. Because he was so influential over the course of his career, this series of letters and works provides a great opportunity to not only get an introduction into his line of reasoning, it also provides a historic blueprint of detailed economic thought. Milton Friedman offers clues about the twentieth-century's economics and political policies.
Milton Friedman is considered to have been one of the great economic thinkers of our time and he was obviously…… [Read More]
Milton Friedman, "Social Responsibility"
Milton Friedman is absolutely blunt and direct in his 1970 critique of the notion that businesses have "social responsiblities" which require them to look beyond their balance-sheets at the real-world effects of their activity. The title of his article states his thesis outright: "The Social Responsibility of Business is to Increase its Profits." Anyone who states otherwise, says Friedman, is "preaching pure and unadulterated socialism" and leans on ideas "that have been undermining the basis of a free society these past decades."
Yet I think that Friedman's argument hinges on his selective and highly tendentious definition of terms here. Friedman switches between political and ethical definitions of the various concepts, so "pure and unadulterated socialism" is used purely as a scare tactic in his opening: in reality, socialism (whether in diluted or concentrated form) has nothing to do with the public calls for businesses to increase…… [Read More]
Accounting and Ethics
The stakeholder model should be implemented in combination with Friedman's shareholder model
In his article, "The Social esponsibility of Business is to Increase its Profits" published in 1970's reputed "The New York Times" Magazine, Friedman debates in favor of precisely what the article's title states. He alleged that corporate social responsibility (CS) was a diversion from the economic rudiments of business that helps in capitalization of profits and yields to shareholders. In his article, when he raised the description of advocates of CS he stated, "The businessmen believe that they are defending free enterprise when they declaim that business is not concerned 'merely' with profit but also with promoting desirable 'social' ends; that business has a 'social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers (Kristin, 2009; pg 7)."…… [Read More]
Contrasting Different Vantage Points Regarding the Role of CSR and Business Ethics
Introduction to Corporate Social Responsibility
Review of the Variety of Ethical Systems
Contemporary Vantage Points
Corporate social responsibilities as well as business ethics have served as hotly contested issues over the last few decades. There has yet to be a consensus reached, to say the least, as to what there composition should look like or even if they are necessary academic pursuits at all. Research was conducted in regards to the various categories of ethical systems in existence and concluded that each system has merit under various sets of circumstances. Furthermore, contemporary individuals who have acted to influence business culture were identified, compared, and contrasted. It was found that there arguments were reasonable based on their assumptions however these assumptions are inherently flawed. The article concludes, that given the growing body of evidence that suggests that life-sustaining…… [Read More]
However, a corporate executive, according to Friedman, would have to spend other people's money for a general social interest, by means of reducing returns to stockholders, lowering worker wages, or raising the price of products. However, herein lies the basic flaw of this author's reasoning, for the social responsibility of the business as it falls on the executive is to make sacrifices for the benefit of others. In a position of such power, a business executive needs to make policy decisions that might actually cut into his own profits, as opposed to the wages of the workers or the wallets of the consumers. While this author may argue that the only responsibility of the business is to make profits using all available resources, engaging in open and free competition without fraudulent activity, a business is a controllable extension of those who own and run it, and just as we have…… [Read More]
This is because they are interested in increasing their overall bottom line numbers at all costs. While, their American counterparts want to see an increase in market share and address a host of social issues. As they believe that the community is playing a vital role in helping to support the organization and its success. This is significant, because it shows how American entrepreneurs want to offer everyone some kind of program that will help to address a host of problems affecting their communities. (Studwell)
A good example of this can be seen by looking no further than idu.com. What happened was the firm was established by Google based on a desire to rapidly expand into China. At first, Google was considered to be the dominant player in the industry. However, the Chinese government began to impose a host of restriction on what content was available. Reluctantly, the company agreed…… [Read More]
For example, AIG got into a lot of trouble during the Great ecession because it was paying retention bonuses so that people about to be laid off would stay on but this was controversial because AIG got bailed out by the federal government. Even though the bonuses were contractually obligated and evne though they served a specific purpose, the vitriol and invective was toxic. This despite the fact that government-serviced entities that were ALSO bailed out the government (Fannie Mae and Freddie Mac) did the same exact payouts for the same exact reason and the outrage for those firms was a lot less even though they cost the taxpayers a whole hell of a lot more money than AIG ever has or probably ever will. In short, businesses operating within the law should not be harassed or treated unfairly but it can happen.
In short, Mackey made some good…… [Read More]
ur place work . 4. 2 detailed examples organizations u friedmans theories applied.
Two of Milton Friedman's main points referred to the belief that all companies had the primary objective of registering profits, and also that it was normal and natural for unemployment to exist to a specific degree; it if were to be entirely eliminated, inflation would be created.
As opposed to Friedman's view, Archie Carroll believes that the primary scope of the economic agents in that of operating in a socially responsible manner. Additionally, the more modern economist states that the focus of corporate social responsibility is the natural response to the evolution in the society and the growing need of business agents to balance the needs of their multiple stakeholders (Carroll, 1991).
If one were to select the principle to implement within the workplace, this would be the emphasis on corporate social responsibility, due to the…… [Read More]
Another well-known economic analyst Milton Friedman, believed that everything wrong in the world could be righted with free market trade. He promoted such ideas of private utilities and removing government involvement from society and business in every conceivable area (the Great Experiment: The Facts About Globalization (http://www.americanassembler.com/issues/globalization/index.html).
ecent studies indicate that such ideas, while looking good in theory are not conducive to successful society. California is a classic example of what can happen if free market utilities are allowed to roam unfettered by government standards of any type.
Friedman believes that complete free growth opportunities without boundaries, such has been the case in some areas of globalization actually harm the worldwide economy and in turn society in general (the Great Experiment: The Facts About Globalization (http://www.americanassembler.com/issues/globalization/index.html).
While globalization has been occurring since the beginning of time the recent expansion of electronic communication has caused the concept to explode with…… [Read More]
The authors use everyday examples, such as "investment in a newly formed small business" to make their economic processes more understandable to anyone who understands modern business, and this is one of the things that makes this book so readable, and so fascinating, even for someone who might not be that interested in economic theory and practice.
The Friedman's support many ideas that would reduce the authority of government in many economic areas, including the "negative income tax, the volunteer army, an improved method of auctioning Treasury securities, the monetary rule for achieving price stability; the voucher system for education, the flat tax, and flexible exchange rates" (Jordan et al. 199). It is quite amazing to see just how many of these Friedman ideas have made their way into our business and political world, including the volunteer army, the educational voucher system, and flexible exchange rates, to name a few.…… [Read More]
Drucker's approach to business ethics revolves around the belief that business people are rational actors who, as agents for the shareholders, will evaluate all decisions on a cost-benefit basis. His view of business builds upon and only somewhat contrasts with that of Milton Friedman, who in 1971 famously espoused that the "social responsibility of business is to increase its profits." This paper will analyze these two views, showing how they are similar and how they are different from one another.
Although Friedman's editorial has been distilled into its pithy headline, his view on the subject of business ethics was complex. Friedman viewed business managers -- executives -- under the agency theory whereby they would be accountable only to the shareholders. Under this view, managers would and should only focus on enhancing shareholder wealth as the underlying philosophy of their actions. Friedman allowed, however, that the actions under this…… [Read More]
A capitalistic society that provides open and free competition did not bring about Enron and similar debacles. It was the second part of Friedman's statement: "without deception or fraud" that led to such situations. It was the greed of several individuals who misreported their profits to get a larger part of the pot. Unfortunately, there will always be individuals like this -- it is human nature. That does not make the whole system corrupt. One can say that the competition inherent in the capitalistic enterprise encourages such behavior. Hoarding by one of the cave dwellers would never work. The hope is that lessons are learned from situations such as these -- that nothing works perfectly.
ichard E. Hattwick, professor at Western Illinois University and co-founder of the American National Business Hall of Fame concludes:
competitive market situations encourage the reasonably high standard of business ethics called the ethic of justice.…… [Read More]
Outsourcing and offshoring are two means by which a business can reduce its costs, and these tactics can also have strategic advantages as well. However, they also typically come at a cost, in particular to workers in industrialized nations. Offshoring in particular has become a political issue as well, cited as a reason for the decline of the middle class. This paper will look at these related issues through a number of different ethical lenses.
Outsourcing is the process of hiring a third party firm to perform tasks that were once performed in-house. Offshoring is the moving of a business function to another country. The processes that are driving globalization -- the regionalization of production, trade agreements, dramatically improved global communication networks -- have also led to increase in offshoring in particular. Outsourcing's growth is similarly related. Many business functions are so routine that there is no need for in-house…… [Read More]
This kind of competition can prove to be more effective than governmental regulations since firms are reluctant to follow government mandates.
Secondary research has been used as the main tool. Important journal articles, case studies and analyses have been included to understand the concept of CS and its use in gain competitive advantage.
ANALYSIS and DISCUSSION
Social responsibility is closely connected with concern for financial growth. According to this belief, firms seek to maximize their profits by investing in a healthy environment and other public good projects. The firms that have successfully attained the prestigious image of being socially responsible follow this ideology. These firms choose to be more socially conscious not because of any real intention of creating a healthier society but because their actions seem to influence buyer behavior in a positive manner. Companies are thus rapidly developing serious CS policies with exclusive departments dealing with this.…… [Read More]
contract between society and business are, in fact, changing in substantial and important ways. Business is being asked to assume broader responsibilities to society than ever before, and to serve a wider range of human values...In as much as business exists to serve society, its future will depend on the quality of management's response to the changing expectations of the public."-from an editorial in Business Week Magazine
Discuss the social contract between society and business, and the arguments for and against corporate social responsibility. What is the purpose of a business? In your discussion be sure to focus on how Milton Friedman, Charles Handy, and Kramer/Porter differ in their answers to that question. Explain why Corporate Social Responsibility is a useful perspective and strategy for a corporate leader and manager to evaluate changes in social expectation and the resulting potential effects on the business (current & potential) by the changed…… [Read More]
There is a good case to be made for focusing on externalities and seeking to manage all of them in a social responsible manner, especially as the world becomes globalized and the key success drivers become relationships and information.
Mintzberg, H. (1994). The rise and fall of strategic planning. Harvard Business Review. Retrieved May 16, 2010 from http://online.worcester.edu/external/evescio/Principles%20of%20Management/strategicplan.pdf
Friedman, M. (1971). The social responsibility of business is to increase its profits. New York Times Magazine. Retrieved May 16, 2010 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
De Toni, a. & Tonchia, S. (2003). Strategic planning and firms' competencies: Traditional approaches and new perspectives. International Journal of Operations and Production Management. Vol. 23 (9) 947-976.
ettstein, F. (2010). For better or for worse: Corporate responsibility beyond "do no harm." Business Ethics Quarterly. Vol. 20 (2) 275-283.
Peng, M., ang, D. & Yi, J. (2009). An institution-based view of international business strategy: A focus on…… [Read More]
Enron was one of the biggest business collapses, and one of the most egregious incidents during a period in the early 2000s when investor faith in the securities system was shaken by a series of scandals. The scandals varied in terms of their composition, but behind each of them was greed, the drive by senior management teams to defraud securities regulators and investors for their own gain. This paper will look at the Enron fraud in particular. This was probably the worst, for the bald-faced contempt that Enron management showed to securities regulators, and the biggest, as Enron was one of the stars of the stock market during its ride up, and crashed to worthlessness almost instantly.
As with most cases of stock market fraud, the key players were the senior executives. At Enron, the key players were Kenneth Lay, Jeffrey Skilling, Andrew Fastow and the accounting…… [Read More]
The estfield Group's success is predicated on its many strengths. One of the key strengths from which estfield derives competitive advantage is its human resources program. One of the key competitive drivers in the industry is knowledge, so estfield has made the development of knowledge, information and wisdom a cornerstone of its strategy. The company not only strives to identify, attract and hire the best talent, but it also has extensive programs in place to bring that talent along. There is a detailed training program, for example. The goal of estfield's human resources strategy is to grow and nurture key staff members. The firm believes that wisdom derives from experience, and therefore seeks to have executives with a significant amount of work experience and a long tenure with the company. Supporting the human resources strategy are tactics of open communication, fostering diversity, and encouraging the free flow of…… [Read More]
hile some firms are content to subscribe to the bare minimum of ethical doctrines, others have pursued a broader stakeholder perspective. The stakeholder perspective posits that ethics derives from outcomes, which places it squarely in the consequentialist perspective, and that those outcomes be considered from the perspective of all stakeholders (Phillips, 2003). This represents an advancement on Friedman's theory, since he considered only the perspective of the firm's shareholders. Friedman's theory was built on the idea that the shareholders have put up their money to invest in the firm and allow management to build it, therefore management is an agent of the shareholder. The stakeholder perspective recognizes the contribution of all stakeholders. Employees also make an investment in the firm, and that investment may go beyond for which they are compensated. Customers, suppliers and other groups as well are invested to different degrees. The environment and society at large are…… [Read More]
Any effort that detracts from that objective -- unless that effort is explicitly authorized by the shareholders -- is therefore a breach of duty. The managers of the Company must therefore have the objective of upholding their duty to the shareholders, within the confines of the law. BP will therefore not be providing research funding, compensation or any other form of assistance to the fishermen, without judicial or regulatory order.
It is important that the Department understands the principles that underpin this decision. BP does not take this decision lightly, and understands that not all stakeholders will have their needs met as the result of this decision. e regret in particular if this decision causes problems for our steadfast partners at the Department of Environment. However, the managers of the Company has no choice but to undertake activities that fulfill their duty to the shareholders, and in this case that…… [Read More]
chief economic principle that must be confronted in the horrifying picture Steven Brill paints in "Bitter Pill: Why Medical Bills Are Killing Us" is the devastating effect caused by economic monopoly. Brill tiptoes around the issue, and basically defines monopoly by the concept of "powerless buyers" -- -but the economic conditions that render buyers powerless are economic conditions that restrict a buyer's freedom of choice, which is precisely the problem with American medicine in Brill's article. Doctors -- or by extension the Medical Industry -- represent a monopoly. There may be a plethora of pharmeceutical companies that exist, and which ostensibly compete under heavily regulated industries (which include a close government supervision on potentially monopolistic new inventions, such that copyrights and patents in pharmaceuticals are guarded under law for a mere fraction of the time that the copyrights and patents, for example, involved with Walt Disney's trademark cartoon character Mickey…… [Read More]
This impacts the entire citizenry, not just the think tank or its backers. Again, we reach the intersection between classical ethics philosophy and economics. hether or not a think tank strives to eliminate bias from its published research, if that research influences public policy to the detriment of the populace, it would be considered unethical. Resnick (2007) promotes the idea that research ethics are important to maintain the trust of the public in such research. hen considering the outcomes of published research, we must then consider whether an economic think tank bears any duty of care towards the populace at large.
It such a duty of care is not owed to the populace, to whom is it owed? This brings back the question of motivation. Basic motivation theories such as Maslow's Hierarchy discuss motivation in terms of human needs (NetMBA.com, 2007). Applied to an organization, we find the heart of…… [Read More]
8-15.6-15.6-15.5-15.6-15.6-15.8-16.1 Subtotal pre-1996 154 15.6-15.5-15.5-15.5-15.5-15.5-15.5-15.9 adapted from PriceWatersHouseCoopers 2008)
1996 Vintage Funds Onwards
No of funds to ec
Venture 72 -1.6 -0.6 -1.9 -2.4-8.7-29.7-42.0-86.7 Small MBO* 16 7.3-3.2-1.9-0.3-3.2-1.3-2.6 -14.2 Mid MBO 73-14.9-13.2-9.3-5.9-4.3-3.6-8.0-17.6 Large MBO 1-23.7-21.0-18.0-13.9-14.3-16.5-30.6-25.2 Subtotal 1996 onwards 182 18.9-16.4-13.2-9.4-9.7-1-1.7-19.8-25.9 Grand total all funds
336 17.3-16.0-14.4-13.0-13.6-14.6-16.2-16.4 adapted from PriceWatersHouseCoopers 2008)
Subcategories (All Vintages)
No of funds to ec
UK 252 14.6-14.4-14.0-13.6-14.1-14.5-15.4-16.2 Non-UK 84-20.2-1-7.9-14.9-11.8-12.6-15.1-18.7-17.5 Pan-European 77-21.6-19.7-17.4-14.0-14.9-16.9-20.9-20.4 Technology 95-0.1-1.0-0.1-0.9-7.4-10.7-12.1-12.8 Non-Technology 241 18.7-17.3-15.7-14.2-14.5-15.3-17.0-17.3
Includes development capital adapted from PriceWatersHouseCoopers 2008)
No of to ec
No of funds to ec
1980-84-13 9.5-9.5-9.5-9.5-9.5-9.5-9.5-9.5 1985-89-68-13.8-13.8-13.8-13.8-13.8-13.8-13.8-1-3.8 1990 13-11.3-11.3-11.1-11.1-11.1-11.6-11.5-11.8 1991 14-23.4-23.4-23.4-23.3-23.3-23.3-23.3-23.7 1992 7-20.3-20.3-20.3-20.3-20.2-20.1-20.0-19.7 1993 10-15.3-15.3-14.8-14.0-14.6-14.6-14.6-16.0 1994 20-34.3-34.3-34.4-34.4-34.3-34.3-34.9-36.9 1995 9-23.1-22.2-21.9-21.9-21.8-22.8-25.7-32.1 1996 15-18.7-18.7-18.6-1-8.5-19.0-20.1-22.0-26.3 1997 25-15.6-14.7-14.9-14.3-14.3-13.7-17.6 n/a 1998 16-12.5-12.2-10.8-10.6-9.3-6.3 n/a n/a 1999 28-15.8-8.8-6.2-1.5 -2.0 n/a n/a n/a 2000 29-16.7-14.9-8.7-4.8 n/a n/a n/a / a 2001 29-29. 1-28.3-23.4 n/a n/a n/a n/a n/a 2002 20-32. 1-23.4* 22.2* n/a n/a n/a n/a n/a Total 336…… [Read More]
Move From Canada
The author of this report has been asked to consider a question about whether a pharmaceutical company should move from its current location outside Toronto to the United States in light of a few factors. These factors include their land outside of Toronto being very valuable, the fact that the taxes and costs of doing business being higher in Canada, the lowered trade barriers that came from the North American Free Trade Agreement (NAFTA) and a few other reasons. While it may seem like an easy decision to make, the company should be diligent about whether they make the move or not because there are both financial and non-financial considerations that should be taken seriously.
As noted in the parameters of the assignment, there are several reasons why a move from Canada to the United States, with the destination state being Colorado, would be a good…… [Read More]
ealth does not equate to happiness, a sense of purpose, dignity or respect. One of the key underlying assumptions of neoliberal philosophy, as derived from Milton Friedman, is that financial wealth is the ideal end goal of all activity. hile financial wealth solves many problems it does not solve all problems. Opponents of globalization, whatever their other arguments, incorporate this understanding into their protestations.
Naomi Klein goes further, suggesting that the unequal wealth distribution in the globalized economy is deliberate. The march towards globalization is not an altruistic endeavor borne of a firm belief in the power of the free market, but is a calculated strategy on the part of the world's elite to seize the world's wealth and power at whatever expense is necessary. Indeed, any economic benefits realized by the masses are incidental. Casualties -- be they citizens of Iraq, indigenous peoples or indeed any of the world's…… [Read More]
In developing countries, consumers are more affected for two reasons. One is that consumers are more likely to buy raw ingredients. ithout manufacturing entities to absorb some of the commodity price increases, consumers are left to absorb almost all of the increase (Ibid.). As a result, food prices have increased more in the developing world than in the developed world. Additionally, consumers in these countries already expend a significantly higher percentage of their income on food than do consumers in estern nations. Thus, demand for food in the developing world is price elastic and consumers suffer because they are unable to meet their food needs.
In the developed world, increased food prices suppress demand in other sectors of the economy, which can cause minor shocks in employment and investment in some businesses and industries. In the developing world, food price shocks can result in starvation and civil unrest. The recent…… [Read More]
Employment Discrimination at Wal-Mart
Foundation of the Study
This study examines the legislative and judicial climate that enables corporations like Wal-Mart to engage in practices that violate workers' rights. The popular consensus is that Wal-Mart, the largest retail store in the United States, displays an inordinate disregard for the human dignity and morale of its employees and, despite continual litigation, continues to blatantly violate the legal rights of its employees. Wal-Mart faces charges of violating The Federal Fair Labor Standards Act (2011) by asking management to adjust time sheets so that overtime will not need to be paid, and so that all employees will work under the hourly limit required by the union in order to obtain membership. Employees were insured, without their knowledge, against their death by Wal-Mart. The company was named beneficiary; following death of an employee, the entire benefit amount was retained by the corporation. Not a…… [Read More]
In other words, trading based on private information might benefit investors, as it stimulates a quicker absorption of new information into the markets, making them more efficient.
It is clear that insider trading continues despite vigorous enforcement of the existing regulations. This is because of the difficulties in detecting and prosecuting it. Further regulations will only add unnecessary complexity to market participants and eventually bind the already limited resources of enforcement agencies, which could be used more usefully. (Letters to the editor, 2007)
This novel (and presumably accurate) information will be beneficial because, these economists argue, markets are most efficient when there is the highest possible amount of information in circulation. The majority of economists, however, believe that insider trading is detrimental to the most efficient functioning of the marketplace -- as well as being detrimental to the most ethical functioning of the market.
Analysis and Discussion
Money, we are…… [Read More]
Thus, the authors do not advocate an ethical free for all, for they acknowledge certain ethical broaches can result in corporate legal costs, thus resulting in executives violating the ethics of their profession -- but this is a more important ethical standard than either laws or social responsibility, stress the authors.
The authors also acknowledge that in the current environment, government regulations must be obeyed by businesses, else they face the costs of litigation. But Macham and Chester also question whether this is a good, namely if too many regulations exist and ultimately hamper corporate profits. In fact, they believe that in the ideal business environment, other than protecting property, the government should not regulate business at all, and rather internal ethical systems should govern the organization, ideally in a Friedman-like utilitarian fashion, taking into consideration the fate of stakeholders only so much as need be, for the organization to…… [Read More]
Under Paul Volcker's chairmanship of the Federal eserve from 1979-1987, to uphold a philosophy Volcker identified as monetarist, the Fed would try to hit specified monthly targets for the growth rate of the monetary supply, "with operating procedures that emphasized control over a narrow and controllable monetary aggregate, non-borrowed reserves (i.e., bank reserves minus borrowings from the Fed)" (McCallum 2008).
After an initial painful period of recession, Volcker's actions had the desired effect upon inflation rates. However, both monetarists and non-monetarists were quick to point out that despite the attempt to hit monthly targets, "because growth rates of M1 fluctuated very widely on a month-to-month basis; the operating procedures in place were, because of lagged reserve requirements, extremely poorly designed for the control of M1; and the Fed never forswore discretionary responses to current cyclical conditions" (McCallum 2008). In fact, "Volcker's strategy to defeat double-digit inflation had been classically Keynesian:…… [Read More]
Companies talk a lot about "corporate social responsibility," but quite frankly nobody really knows what the term means. Every company seems to interpret the idea a little bit differently. There is nothing inherently wrong with that, but it raises challenges for managers trying to understand the concept and what relevance it has to their organizations. The best approach has to be to analyze the different elements of CSR individually, and see how they apply. This approach also allows for the organization to integrate each element with its strategy -- trying to shoehorn a notoriously vague concept into strategy either results in it not really happening, or it happens but distracts the company from what it really wants to achieve.
The first part of this paper will explore the different conceptions of CSR. This is absolutely essential. The "social" is CSR is the key term, and it implies an external…… [Read More]
If the enhanced stakeholder perspective is truly the best for corporate social responsibility, this has significant implications not only for management but also for corporate governance. hile Nohria (no date) argues that corporate governance is a hygiene factor in that its absence is a problem for companies but its presence did not correlate with improved performance, this is only for basic levels of governance. For a board to truly adopt a broad stakeholder perspective, it must be built better. Nadler (2004) argued that a well-constructed board will be one that helps to deliver superior results to the firm. Taking a broad stakeholder perspective, this means that the board should be capable of understanding the perspectives of different stakeholders rather than simply those of the shareholder. Building a board in this way, however, is constrained by the fact that the shareholders vote for the board. At times, other stakeholders may gain…… [Read More]
Contemporary agency theory dictates that managers only act in the interest of maximizing shareholder (owner) wealth (Roberts, 2004). This standard can be reasonably viewed as the minimum ethical standard that the president of a company should have. Taking this view, Thomas Koltun is essentially in damage control mode. Because of the mistakes of the company in the past, Koltun is faced with significant downside risk from mishandling this situation. It could also be reasonably argued that Thomas Koltun still bears responsibility for the original ethical imperatives that the company has had all along as the result of bringing the Travel-Lite to market. If three-quarters of these products are as yet unaccounted for, then the company still bears ethical obligations as defined by the CPSC with regards in particular to consumers.
There are serious implications associated with a mishandling of these obligations. The company has suffered ethical failures in relation to…… [Read More]
Corporate social responsibility is a reflection of societal ethical norms. There is some disagreement in our society what the norms for corporations should be. A corporation is comprised of people, but the norms for corporations seem to be different from the norms for the people that comprise the corporation. This paper will explore these ideas to determine what corporate social responsibility is, and should be.
A corporation is a legal entity, but without the people that run it, a corporation is nothing. Thus, a corporation being a legal entity rather than a living entity -- the apparent exception to this reality in the United States notwithstanding -- a corporation cannot make decisions. It has no ability to conceive of anything, to have ethics, or indeed even to behave. In that sense, the idea of corporate social responsibility is an absurdity. A corporation has no greater capacity to make an ethical…… [Read More]
It involves a new way of thinking and living "based on attention to people, and not primarily attention to goods" (Schumacher 70). Such a new system would prioritize the local community, would reinvigorate agriculture through the use of intermediate technology, would re-infuse rural life with dignity, and would stop depleting natural resources. He is fond of quoting the Gandhi dictum of "production by the masses, rather than mass production." Rather than pouring aid into developing nations, which has not be shown by positive economics to have any effect on reducing poverty, he believes there should be an emphasis on real education -- teaching people how to become sustainable with new affordable technology rather than just giving them factory jobs. The key is on making the technology affordable, which means relaxing the grip of capital and cost saving in view of the higher goal of helping human beings create fruitful lives…… [Read More]
This school emphasizes finding the best ways to maximize motivation and the fulfillment of needs (Cole, 2004). Lin still emphasizes the need to achieve results, but is seeking to reduce the burn and churn element of the company. By taking a more humanist approach to management, she is operating under the assumption that this will keep the employees able to drive results over a longer time period.
It is difficult to determine which of these two approaches works better. Bossidy's approach is predicted to realize results in the short-term but may not be effective over the long-term. However, 29 quarters is over seven years, so there is merit to the argument that Bossidy's approach can be sustained. There are employees that thrive under such working conditions and if the rewards are sufficient, those employees will continue to be attracted to Allied Signal.
There have been studies that show that Lin's…… [Read More]
double check word count after revising and fill in missing reference information such as year published for McMurtry, thanks
In Charles Handy's 2002 article, What's a Business For?, he essentially argues, like McMurtry, for a social economy built from businesses that see themselves as communities with a higher purpose (Handy, 2002; McMurtry). McMurtry defines a social economy as one in which "economic activity is neither controlled directly by the state nor by the profit logic of the market, activity that prioritizes the social well-being of communities and marginalized individuals over partisan political directives or individual gain" (McMurtry).
Handy has come to his conclusion -- favoring a social economy -- based on the recent decline of the American economy and demise of the capitalist corporate image (Handy, 2002). As Handy notes, there are rules and laws in a market economy, but even those rules and laws depend upon some basic trust…… [Read More]
BP Deepwater Horizon
In April, 2010, Gulf of Mexico oil rig Deepwater Horizon, managed by British Petroleum (BP) suffered an explosion, sank to the bottom of the sea and precipitated an oil leak that would take months to cap (Pagnamenta & Goddard, 2010). The disaster was costly for BP both financially and reputationally, and the company's responses have not engendered much faith among the general public with respect to BP's ethics or its willingness to address the concerns of those whose lives have been devastated by the disaster. The company's strategy throughout the course of the disaster from the point prior to the disaster to its handling of the legal actions taken against it, has drawn the ire of many observers.
This paper will analyze BP's strategy, in particular with respect to its balance between the public relations issues and the financial issues. BP's approach appears to be internally consistent,…… [Read More]
Managing Out -- the Public Sector in the Community
Two major economic positions have dominated the public sector for more than a decade. One side believes that the government should take primary responsibility for the welfare of its citizens, while the other contends that greater reliance on the private sector is the method by which an economy can be more effectively managed. The first idea has largely been gleaned from the works of Keynes. He was an economist who believed that government intervention was required to maintain a stable economy and that the state was better equipped to be the central figure in economic management because it has a duty to the citizens which the private sector does not (Pressman, 2011). The counter to this politically liberal position is that of Frederich Hayek. He believed that free markets were the best regulators of the economy ( Griffiths, 2007) and that…… [Read More]
Canadian Business and the Law
Does Canada have too much business law?
This is paper is based on the Canadian business law and all the information so mentioned are related to the book titled "Canadian Business and the Law" which is written by authors Dorothy DuPlessis, Steven Enman, Sally Gunz and Shannon O'Byrne. This text forms the single source of reference for this study.
Two topics will be discussed based on what this paper is about, and they will include; the most important aspects of the Canadian legal system for businesses operating there and secondly the relationship between business ethics and the law in business in the Canadian context.
Important aspects of the Canadian legal system for business
It is always an important topic when discussing about doing business in Canada; the legal system has a very huge impact on commerce in the country and generally it influences on how…… [Read More]
Job Creation and Government
JOB CEATION SHOULD NOT BE GOVENMENT'S ESPONSIBILITY
Government in all capitalist nations is actually responsible for efficient allocation and diversion of resources and not for creation of employment opportunities for the people. Capitalist countries thrive on the principle of entrepreneurship and in such countries corporations literally control all economic activity. For this reason, it is impractical to expect the government to intervene when employment opportunities are scarce. Instead government's intervention must be limited to efficient allocation of economic resources and regulation of financial markets through fiscal measures during times of economic slow-down. But under no circumstances, should the government be expected to raise employment level in the country because it is essentially incapable of carrying out the task successfully. It has been noticed that when government is assigned the task of job creation, it does so inefficiently usually hiring more people than needed for various government…… [Read More]
open-ended question. I don't know about organizational thinking -- individuals think; an organization has no brain. I do know, however, that strategy is set within organizations on the basis of all manner of internal and external variables. Several frameworks have been developed to help understand how this process works, and if there are any differences between long-term and short-term approaches to strategy and environmental analysis. A dichotomous time-frame might be an oversimplification, since everything has a unique time-frame, but it works in a generic sense.
Environmental scanning is a critical element of strategic thinking at all levels of the organization. Porter (2008) devise the five forces that shape competitive strategy. These focus on competitive factors in the external environment, and competitive factors often reflect economic and social factors in particular. Intensity of rivalry, for example, derives largely from the competitive structure of the industry -- basic microeconomics. Social factors determine…… [Read More]
Ethics are often stronger than the laws of the land. Laws are cobbled together by special interests and have little to do with right and wrong, or personal ethical codes. For most people, their own personal codes of ethics will be stronger than the laws. People are much less likely to violate their own personal ethical codes than the laws.
Morals are codes of conduct put forward by a society, often within the context of a cultural or social group. Ethics are, following the Aristotelian tradition, a general guide to behavior that an individual adopts as his own guide to life (Gert, 2011). The relationship between the two is self-evident: while ethics are individual they are often strongly influenced by society's moral context.
Kohlberg (1971) outlined morals are being pre-conventional, conventional and post-conventional. Pre-conventional morals are in the obedience and punishment orientation and the self-interest orientation. Like when you learn…… [Read More]
In business, there is a conflict of ideas between the competing ideas of shareholder theory and stakeholder theory. This paper will outline what each of these theories is, and underscore some of the issues in this debate.
Shareholder theory is the idea that businesses work for the shareholders. The idea was perhaps most famously elaborated by Milton Friedman in 1970. Friedman, arguing at a time when the idea of corporate social responsibility was just becoming popular, made a case that the social responsibility of business is to increase its profits. He offered the constraint that it should do so within the legal and moral context of the land, but the crux of the argument is that businesses do not have other responsibilities beyond the profit motive. At the heart of this theory is the idea that businesses are nothing more than a vessel by which investors…… [Read More]
In this world view, the Canadian system of business regulation is ripe for the pruning of its lower branches, where the most liberal, socially, and environmentally-friendly legislation has been enacted that has cut into the bottom line of businesses nationwide (DuPlessis, Enman, Gunz, O'Byrne, 2011). Often, the conservative perspective would like to give personal legal rights to businesses with less consideration put upon the responsibilities that arise from such a legal status. This is to say that businesses, like people, should be afforded rights as well as responsibilities as the cost of the rights granted and enjoyed.
From the other side of the tracks, from a more liberal perspective, business ethics and regulations are different hands on the same body. This is to say that this group of people believes that the more businesses are regulated and ethically fixed; the better off an economy is (DuPlessis, Enman, Gunz, O'Byrne, 2011).…… [Read More]
(Major Schools of Economic Thought) This theory was born from the crucible of a Great Depression and a orld ar. Chicago theorists vehemently disagreed. They made the argument that the wealth of nation's increase when the market is allowed to naturally price goods and services. Spending would unnaturally change the prices of these goods, thus changing the reaction of the market to the goods, causing a misallocation of wealth or goods.
According to the Chicago theorists, the role of a government was to make sure individual rights were not trodden upon during market interactions and to mitigate the damage of neighborhood effects. Neighborhood effects are defined by Milton Friedman, the godfather of Chicago Economists, as when, "the action of one individual imposes significant costs on other individuals for which it is not feasible to make him compensate them or yields significant gains to them for which it is not feasible…… [Read More]
Part 3: On the Subway.com website, Subway highlights some of its sustainability initiatives. The company works with Energy Star to reduce the energy usage of its stores by using more efficient light bulbs. The company does this in partnership with Philips, the manufacturer of the light bulbs.
Subway has a new store concept known as the eco-store. The first Subway eco-store opened in Kissimmee, Florida in 2007 and two more are open in Oregon. The eco-store is built according to standards set by the U.S. Green Building Council, including Leadership in Energy and Environmental Design (LEED) certification. Such features of these stores include high efficiency HVAC systems, remote condensing units for refrigeration and ice-making, high efficiency lighting, low flow water fixtures and decor made from sustainable resources, including recycled materials. hile there are only three eco-stores in existence, the company is developing more. At some point, Subway could take the…… [Read More]
There are three main ways to analyze financial statements. They are ratio analysis, common size analysis and trend analysis. These three forms of analysis allow the firm's financials be compared to industry norms, to the firm's past performance and on a raw basis. By using these techniques, the analyst can gain a sense of where the firm stands today, where the firm has been in the past, and what the current trends of the business are.
Ratio analysis covers a wide range of ground, including liquidity, profitability, solvency and managerial efficiency (Leka, 2007). These ratios outline the financial condition the firm is in, and attempt to derive some understanding of how the firm got into that position. Trend and common-size analysis allow for better year-over-year comparison, while ratio analysis can facilitate analysis across different firms in the same industry.
In addition to performing these basic forms of analysis, it is…… [Read More]
BP and how it can impact on the performanve of the firm
In the recent times, a number of people have opposed the strategies that have been developed by BP. The major strategies that have been opposed by individuals is that of stoping the case regarding oil spill in the gulf of mexico.Operational strategy and effectiveness are vital for superior performance which is usually the main aim of all enterprises and organizations. A firm may perform better than its rivals only if the organization is capable of establishing a difference it is capable of preserving. The firms have to deliver higher values to its customers. Besides, the organizations should be capable of creating comparable values at very low costs. Delivering higher values enables companies to charge higher unit prices. Similarly, very great efficiency and effectiveness will result into very low unit costs. Operational effectiveness (OE) implies performing same activities more…… [Read More]
economic tools concepts to evaluate a current issue situation which exist today in the U.S. health care industry
There are two sets of health issues and many players in the health industry. One set of paradigm deals with the public and private health care issues, and another the emerging trend of market oriented changes in the health care industry. Hitherto health care was a public service but has now transformed itself into a competitive industry. In other words it has become a part of the national economy and economic analysis is not only important to care givers and institutions, but is also important to doctors and medical workers because the health industry is highly competitive. The debate on public health issues changed in the past with more scientific developments and insight into community care and medicine. (Fox; Ludden, 1998)
Some of the modern developments of the end of…… [Read More]
As a society, we allow government to help companies from time to time with tax and trade policy, because those companies create jobs. Part of the social contract of Americans is that we shall help each other out in times of crisis. Yet, this nation is a democracy, and the laws of the land should therefore reflect the will of the people who elected the politicians who wrote those laws and appointed those judges. As such, the categorical imperative is equivalent to the laws, and there are no laws forbidding this outsourcing. Additionally, a case could be made that there exists no social contract to protect American jobs. Our society is a free one, where liberty is valued above all. Employees are hired "at-will" and they have freedom to sever the employer-employee relationship equivalent to the freedom held by corporations. There is no mutual obligation, in absence of a valid…… [Read More]
There has been little in the way of fiscal policy, and the result has been entirely predictable. ith no particular influx of spending into the economy, the recovery has generally been quite weak. ith no fiscal policy tools on the horizon, it is therefore unlikely that any improvement to the recovery will take place.
International business is also an option for a company to improve its situation. If a company wants to sell, for example, running shoes, it has a number of options for this. The company could make the shoes in one country and sell them around the world. The company could also make the shoes in a number of different countries for local sale. It is recommended that the country should take advantage of economies of scale and produce in one country. Then, the company should sell the shoes all over the world. It can use local help…… [Read More]
Cable provider Adelphia was one of the major accounting scandals of the early 2000s that led to the creation of the Sarbanes-Oxley Act. A key provision of the Act was to create a stronger ethical climate in the auditing profession, a consequence of the apparent role that auditors played in some of the scandals. SOX mandated that auditors cannot audit the same companies for which they provide consulting services, as this link was perceived to result in audit teams being pressured to perform lax audits in order to secure more consulting business from the clients. There were other provisions in SOX that increased the regulatory burden on the auditing profession in response to lax auditing practices in scandals like Adelphia (McConnell & Banks, 2003). This paper will address the Adelphia scandal as it relates to the auditors, and the deontological ethics of the situation.
Adelphia was once a…… [Read More]
Ethics primarily acts as a check to ensure that the corporate strategy is enacted effectively. arely do firms take ethics into account as a key element of strategy, though it does happen once in a while. Generally, the role that ethics plays is tangential to strategy aside from its role as a check. obin and eidenbach (1988) elaborate further on this idea, noting that "without the integration of ethics at the very beginning of the planning process… the organizational culture may not provide the checks and balances needed…" Their argument is that while corporations tend to put the profit motive forward first, a lack of ethics can undermine the objective of maximizing shareholder wealth. Having a strong program of ethics built into the organizational culture reduces the risk of major ethical lapse.
A couple of recent issues highlight the importance of building an ethical culture to maximizing shareholder wealth. Enron…… [Read More]
Educational Vouchers: Multiple Issues and Contradictory esults
The Merriman-Webster online dictionary offers three definitions for "voucher": "...a documentary record of a business transaction; a written affidavit or authorization; a form or check indicating a credit against future purchases or expenditures." None of the three even approaches the emotionally charged version of the term "voucher" when it comes to the current debate swirling around public vs. private schools. This paper digs into the "vouchers" - or "scholarships," or "subsidies," if you prefer - provided to families in several cities and states, to move their children from less desirable, academically troubled public schools to more desirable, for-profit private, mainly religious schools.
Long before there was any discussion about vouchers, Horace Mann of Massachusetts - the "Father of American public school education" - was in the vanguard of the movement (1837) to solidify support for quality public education, excellence in teacher training, and…… [Read More]
School Choice Program
This study aimed to determine the impact of school choice through a comparative study of two private schools, which serve primarily, or exclusively African-American students, and a public school.
Data in student achievement in math and reading and data on student attendance were used to determine the impact of choosing a school. Qualitative data derived from interviews with administrators and faculty as well as classroom observation were used to provide additional insight regarding the intellectual climate of the two private schools and the public school.
The focus of this study was on mathematics and reading in middle school students in both public and private schools in Milwaukee, as well as the focus of reform in the state -- reading in Michigan, writing in Vermont and California. This approach enabled me to adequately address my research questions and prove or disprove my hypotheses.
To begin, I conducted structured…… [Read More]