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Business Priority: Owner’s Profit or Social Value? Essay


Introduction

The main objective of establishing a business has been a topic up for debate. Some of the most famous authors have continuously stated that the main objective of starting a business is to create wealth for the owners and shareholders of the business through the profits that are to be experienced by the same businesses (Bejou 2011, p. 2). They have continued to say that, if any business is not able to generate enough profit for its own running, this may lead to bankruptcy in that the business will not be able to sustain itself when it comes to the conducting of all matters pertaining to the business. Some have said that the main objective of any business is to be able to deliver the right quality of products and services to its customers and consumer. In addition to that, the business must be able to enrich the lives of the people involved in one way or the other (Fernando 2011, p. 25).

The author of this essay will conduct a research to find out if the main objective of setting up any business is to be able to generate wealth for the owner and shareholders through the profit margins that are experienced by the businesses. In addition to that, the author of this essay will conduct research on the arguments that have been elicited from the debate as to what the main reasons for setting up any business are.

Discussion

According to Wilcke (2004), who was one of the world’s most famous economists, the sole objective of setting up any kind of business is to be able to create wealth to the owner and the shareholders of the business. He summarized this statement which has become one of the most famous statements when it comes to matters pertaining to the setting up of a business. He continued to say that, if the sole objective of any given business was not to create wealth then this would mean that businesses would not have any kind of competition when it comes to the increase in the profits that are to be gained (Wilcke 2004, p. 188). This would then translate to fewer benefits for the owner, shareholders and the employees of the business. He continued to say that, any business that was not able to generate profit would not be able to sustain itself, considering that the profit is required for the funding of the activities involved in the business. This analysis conducted by Wilcke (2004) elicited a heated debate among other economists who thought otherwise.

The economists said that the sole objective of any business is not just able to create wealth for the owner and shareholders, but it must also be able to create employment in that the business must be able to employ other people in the society (Sharma 2002, p. 52). The business must also be able to deliver the best quality of products and services to its customers and consumers which will lead to customer satisfaction which may eventually translate to an increase in the profit margins that to be experienced by the business. On the other hand, the business must be able to bring new technological and social innovations into the market that may help in the improvement of the social status of the people involved in the business. The business must also help in the economic growth of the country’s GDP (Sharma 2002, p. 55). This has prompted other organizations to come up with more objectives that are to be upheld by any given business during and after the set up process.

One very important philosophy that any business is to adhere to is the corporate social responsibility (CSR) which will be able to guide the perception that the society will have towards the said business through the creation of wealth for the shareholders from the profits that are experienced by the business. In CSR, a business must be able to adhere to the rule and regulations that are set with regard to the business (Van Beurden & Gossling 2008, p. 410). These rules are set to help in the smooth running of matters pertaining to the business and the business that is being set up must be able to adhere to them. The business must also be ethical in the decisions that it makes in that the owner must consider the customer and consumer during the making of a decision pertaining to the business. In addition to that, the business must be able to increase on the profit margins that are experienced by the business. This will help in the smooth running of all business affairs at the same time create wealth for the owner and the shareholders of the business (Van Beurden & Gossling 2008, p. 415). The main reason for the use of CSR in the setting up and running of any business is to help in the enhancement of the corporate image that is held by the business. This will go a long way in the increase of profit margins that are experienced. For any given business to be able to adhere to CSR, it must be able to adhere to other values.

The main values that any business must be able to adhere to with regard to CSR include; the business must uphold the highest level of integrity in that every employee must be held responsible for the kind of job that they will be doing. This will help in customer and consumer satisfaction through the delivery of quality products and services to the customers and consumers (Husted & de Jesus 2006, p. 89). The business must also support welfare organizations which may include organizations that fight for human right and those that fight for the rights of the women in the society. This will go a long way in the enhancement of the corporate image which will then translate to an increase in the profit margins that are to be experienced by the business. On the other hand, the business must go ahead and support organizations that fight against social ills which may include organizations that fight against poverty and diseases in some parts of the world. This will also help in the enhancement of the corporate image which is very important for any business to consider (Husted & de Jesus 2006, p. 92).

In addition to that, the business must come up with projects that are going to be of very great value to the society. These projects may include the building of roads, schools and hospitals. If the owner of the business is not able to fund these projects, they may as well support the companies that are involved in the projects which will also go a long way in the enhancement of the corporate image. The business must also support freedom among the shareholders and the employees in that the employees must feel free so as to enable them to speak out with regard to issues related to the delivery of quality products and services to the customers and consumers. This will help the employees in that they will be able to feel comfortable in their workplaces which will go a long way in improving customer and consumer satisfaction (Ghosh 2008, p. 62).

The business must also uphold responsible practices in the workplaces. Some of the responsible practices that the business may uphold include the adhering of rules and regulations that are set with regard to employees working in dangerous workplaces. The owner of the business must provide the employees with protective clothing that will protect them from the harmful and dangerous products that they may be working with. This will improve service delivery which will then translate to the increase in the customer and consumer satisfaction. On the other hand, the business must be able to adhere to the rules and regulations that are set with regard to environmental conservation. The business must be able to conserve the environment which will then improve on the enhancement of the corporate image that is being held by the business (Ghosh 2008, p. 78).

On the other hand, CSR involves accountability of the business in that the business must be accountable in every aspect which may include social, moral and financial. The business that is to be conducted must be transparent in that the customers and consumers must see the transparency in the business for them to work with it. Without transparency, the customer and consumers will not be able to get the best quality of products and services that they require which may have a negative impact on the profit margins that are to be experienced by the business. The business owner and the shareholders must be able to come up with rules and regulations that are to be adhered by all employees which are aimed at increasing customer and consumer satisfaction with the quality of products and services that are delivered by the business (Shaw 2009, p. 589). This is very important in that the customer and consumer satisfaction will determine the profit margins that are to be experienced by the business.

On the other hand, the business must also take into consideration the demands that are put in place by the customers and consumers (Shaw 2009, p. 592). By taking into consideration this fact, the business will be able to deliver the quality of products and services that are expected by the customers and consumers which will go a long way in the increase of customer and consumer satisfaction. This responsibility of ensuring that there is customer and consumer satisfaction is not solely left to the business owner or the shareholders, every person who is involved in the delivery of products and services to the customers and consumers must be involved in the process of making sure that the demands that are set by the customers and consumers are followed. This is because the profit margins that are to be experienced by the business solely depend on the satisfaction that the customer and consumer will have towards the quality of products and services offered by the business.

Many famous authors have said that, for any business to get started and grow, the owner and the shareholders must put the interest of the customer and the consumer first from their own. The main focus of the business is not supposed to be the generation of profits that are going to be used in the creation of wealth for the owner and the shareholder; it should be the delivery of the best quality of products and services to the customers and consumers which will then lead to profit generation (Maheshwari 1997, p. 56). They have continued to say that, businesses that are specifically focused on profit generation end up bankrupt in that they are not able to adhere to the quality of products and services that are delivered to their customers and consumers which in turn has a negative impact on the profit margins that are experienced by the business. This will then mean that the business will not be able to sustain itself in terms of being able to cater for their employees and other matters that are involved in the running of the business (Maheshwari 1997, p. 62).

The business must be able to perform in terms of delivery of quality products and services for it to be able to generate any kind of profit. According to Craig (2003), Maheshwari (1997) did not consider all aspects that are involved in the running of any kind of business in that if the sole objective of any business is profit generation, then this will have a negative impact on the service delivery of the business. According to several researchers, this may have very drastic effects on the profit margins that are to be experienced by the business and thus the business owner should not solely target profit generation when setting up a business (Craig 2003, p. 55). The business owner must consider the social performance of the business which will determine the profit margins that are going to be experienced by the business in the long run.

According to the research that was conducted by the author of this essay, many business owners solely target profit generation when setting up a business which has led to most of the businesses ending up in bankruptcy (Shaw 2009, p. 598). The author of this essay also found that most of the profit that is generated in the businesses is aimed at the creation of wealth for the owners and the shareholders of the businesses which is a fact that has been proven to have a negative impact on the social performance of the business. It is also important to consider that most of the business owners do not consider their customers and consumers when it comes to decision making which is very important. According to several researchers, it is very important to consider the customers and consumers when making decisions because they determine the profit margins that are to be experienced by the business through their satisfaction. It is also important to consider issues that have been raised by customers and consumers with regard to the quality of products and services that are delivered by the business (Ahlstrom 2010, p. 15).

On the other hand, the author of this essay found that most of the business owners are not in a position of being able to bring new product innovations into the markets which may help in the customer and consumer satisfaction. The main reason for this is because; most of the profit that is generated from the business is directed towards the creation of wealth for the owner and the shareholders in the business. This is also a major factor that has caused the bankruptcy in many businesses because the business owners and the shareholders have had their sole objective as wealth creation thus spending up all the profit that is generated from the business. Another main reason that the author of this essay found is, most of the business owners and shareholders do not consider the comments that are made by the customers and consumers with regard to the products and services that are delivered by the business. If the comments are taken into consideration, they may have a major impact on the customer and consumer satisfaction (Cosans 2009, p. 394).

In a recent survey that was conducted, it was found that businesses that did not do anything with regard to increasing their profit margins were punished by loosing more than two third of their market share. This prompted business owners to come up with ways that are aimed at ensuring that there is an increase in the profit margins that are experienced by the business. Some of the ways that the business owners have put in place include the recruitment of employees who are capable of delivering the best quality of products and services to the customers and consumers (Cosans 2009, p. 396). This is all aimed at increasing the customer and consumer satisfaction which will then determine the profit margins that are to be experienced by the business. The business owner and shareholders have also put in place rules and regulations that are followed by the employees that are aimed at improving the quality of products and services that are offered to the customer and consumer. In addition to that, every employee is also being held responsible for the quality of products and services that he / she delivers to the customers and consumers. This has helped the business owners and shareholders to understand the strengths and weakness of each employee (Cosans 2009, p. 398).

Conclusion

In this essay I have argued that, profit generation should not be considered the sole objective of any given business as it has been found that it may have a negative impact on the social performance of the business. This is through the delivery of products and services that are of poor quality to the customers and consumers which may then have a negative impact on the profit margins that are to be experienced by the business. In addition to that, the customer and consumer demands must also be considered during decision making as these are the factors that will determine the satisfaction that the customer and the consumer will have towards the products and services that are offered by the business. The sole objective of any given business it to be able to deliver the best quality of products and services to the customers and consumers as they are the main determining factor in the determination of the profits that are to be experienced by the business. On the other hand, the business owners and shareholders must come up with rules and regulations that are going to ensure that every employee is held responsible for the quality of products and services that are to be delivered to the customers and consumer as this will improve integrity within the employees.

References

Ahlstrom, D 2010, ‘Innovation and Growth: How Business Contributes to Society’, Academy of Management, August, pp 11-24.

Bejou, D 2011, ‘Compassion as the New Philosophy of Business’, Journal of Relationship Marketing, vol.1 no. 10, pp 1-6.

Cosans, C 2009, ‘Does Milton Friedman Support a Vigorous Business Ethics?’ Journal of Business Ethics, vol. 1 no. 87, pp 391-399.

Craig SN 2003, ‘Corporate Social Responsibility: Whether or How?’ California Management Review, vol. 45, no. 4, pp 52-76.

Fernando, A 2011, Business Environment, Harvard University Press, London.

Ghosh, P 2008, Managerial Economics, Sage, New York.

Husted, BW & de Jesus SJ 2006, ‘Taking Friedman Seriously: Maximising Profits and Social Performance’, Journal of Management Studies, vol. 43 no.1, pp 76-91.

Maheshwari, R 1997, Principles of Business Studies, Oxford University Press, London.

Sharma, P 2002, Entrepreneurship, Cengage Learning, Oklahoma.

Shaw, W 2009, ‘Marxism, Business Ethics, and Corporate Social Responsibility’, Journal of Business Ethics, vol. 1 no. 86, pp 565-576.

Van Beurden, P & Gossling, T 2008, ‘The Worth of Values – A Literature Review on the Relation Between Corporate Social and Financial Performance’, Journal of Business Ethics, vol.82 no.2, pp 407-424.

Wilcke, RW 2004, ‘An Appropriate Ethical Model for Business and a Critique of Milton Friedman’s Thesis’, The Independent Review, vol. IX, no. 2, pp 187-209.

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IvyPanda. (2020, September 4). Business Priority: Owner's Profit or Social Value? Retrieved from https://ivypanda.com/essays/business-priority-owners-profit-or-social-value/

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IvyPanda. "Business Priority: Owner's Profit or Social Value?" September 4, 2020. https://ivypanda.com/essays/business-priority-owners-profit-or-social-value/.

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IvyPanda. 2020. "Business Priority: Owner's Profit or Social Value?" September 4, 2020. https://ivypanda.com/essays/business-priority-owners-profit-or-social-value/.

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IvyPanda. (2020) 'Business Priority: Owner's Profit or Social Value'. 4 September.

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