MBAV 5101, STRATEGIC MANAGEMENT AND BUSINESS POLICY UNIT III: COMPARISON COMP ARISON THEORIES OF FRIEDMAN & CARROLL IN SOCIAL RESPONSIBILITY
Student : Nguyen Thi Phuong ID : 217146 Class : HAM #23 Professor : Bari Courts Nguyen Thi Phuong ID 217146 STRATEGIC MANAGEMENT AND BUSINESS POLICY - HAM#23-CITC
Content 1. Summ Summar ary y of of Mil Milto ton n Fri Fried edma man' n's s the theor ory y 2. Su Summ mmar ary y of of Ar Arch chie ie Ca Carro rroll ll's 's th theo eory ry 3. Pr Prin inci cipl ples es imp imple leme ment nted ed CSR CSR the theor orie ies s at current my work. 4. Ex Exam ampl ples es of or orga gani niza zati tion ons s wh wher ere e Friedman's theories are applied. 5. Ex Exam ampl ples es of org organ aniz izat atio ions ns wher where e Carro Carroll ll's 's theories are applied. References Nguyen Thi Phuong ID 217146
Summary of Milton Friedman's theory Milton Friedman
"There is one and only one social responsibility of business-to use us e its resources and engage in activities designed to increase its profits so long as it stays stays within the th e rules of the game, which is to say, engages in open and free competition without deception or fraud.“ -Milton Friedman- US economist (1912-2006) •
Nguyen Thi Phuong ID 217146
Summary of Milton Friedman's theory Friedman’s central point. •
responsibilit y ” Business does not have a “social responsibility in the sense of having an obligation to promote desirable “social” ends, for example, clean environment, fulfilling jobs, prejudice-free society, etc.
Summary of Milton Friedman's theory •
By taking on the burden of social cost, the business becomes less efficient: Prices go up to pay for increased costs; or
Investment in new activities & research is Investment postponed •
Firms are responsible to only their shareholders Purely economic reasoning
Summary of Milton Friedman's theory •
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Maximize profits, but never forget that shortterm focus can undermine long-term gains, and never forget that breaking the rules of society – both formal rules like laws and informal rules like generally accepted norms of business behavior – will put you out of business. This comes close to Utilitarian ethical theory, which requires you to weigh ALL of the outcomes -- NOT just short term economic benefit to you.
Summary of Archie Carroll 's theory Discretion ary (Might Do)
Economic (Must Do)
Social Responsibil ities
Legal (Have to Do)
Ethical (Should Do)
Summary of Archie Carroll 's theory Business firms have four four responsibilities (a) Economic •
Produce goods & services of value to society so that the firm may repay repay its creditors creditors and stockholders
(b) Legal •
Defined by governments in laws that management is expected to obey
Summary of Archie Carroll ‘s theory (c) Ethical •
Follow generally held beliefs about how one should act in society –
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Work with employees & community in planning for layoffs, layoffs, though no laws requiring this Many people expect firms to do these things
(d) Discretionary •
Purely voluntary obligations obligations a firm f irm assumes –
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Philanthropic contributions, training hard-core unemployed, providing day-care centers, etc. Many people do not expect firms to do these things
Principles implemented CSR theories at my work Social responsibility in my business: To preserve and develop the cultural identity of the
company Protect the rights of workers Anti-Corruption Environmental Protection To create favorable working conditions for employees Narrowing the gap staff and leadership For the benefit of the community Transparency in financial reporting, and transparency in the activities of the working principle
Principles implemented CSR theories at my work •
"Mounting social business "is the motto of the long-term nature of my business. In parallel p arallel with the the development of effective effective business operations, we are committed to actively contribute to the community and society through direct social activities, financing activities, charitable movements, thereby raising awareness and social responsibility of each member company
Examples of organizations where Friedman's theories are applied The deeds of Vedan during many years Vedan (Vietnam) Enterprise Corp. Ltd is a MSG (monosodium glutamate) plant. It was established established in 1991. The plant was built next to Thi Vai River; therefore its waste water treatment had great influence on Thi Vai. The river began to be polluted in 1994 right after Vedan started its operations. In 1995 the river water began to change its color and emanate ema nate a disgusting smell. 2008 - That heavily polluted this river, caused immense damage to the residents living near this river.
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Vedan CSR Reasons behind Vedan deeds are to cut down the cost of waste-processing Sewage treatment is the process of removing contaminants from wastewater. wastewater. It It includes includes physical, chemical, and biological processes to remove physical, chemical and biological contaminants. It can be seen that the industrial wastewater treatment process is very complicated and requires high cost which is estimated about 31 million USD
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Vedan CSR The consequences - suspended the plant’s wastewater discharge license - fined the company 127 billion VND - have to pay the cost co st of restoring restorin g the river, river, - have to construct a sewage treatment system in order to minimize the environment pollution. - Decline in revenue: Vedan’s operations were interrupted for a time. - People do not trust Vedan Vedan as before, some grocery stores and marke mar kets ts even boycotted boycotted all Vedan products. - Significant fall in both Vedan revenue and reputation.
Examples of organizations where Caroll's theories are applied Ben & Jerry J erry’’s is a Vermont Vermont-based
manufacturer of ice cream, frozen yoghurt and sorbet, was founded in 1978 and was subsequently acquired by Unilever. Unilever. "Business "Business has a responsibility to the community and the environment" environment" is Ben & Jerry's mantra mantra and it certainly walks the talk when it comes to corporate social responsibility.
Ben & Jerry's CSR •
Engaging the Community through Communitybased Projects Sustainability Project, P roject, In the Vermont Dairy Farm Sustainability which was launched by Ben & Jerry’ Jerry ’s in 1999. This CSR project sought to develop practical methods that could be used on typical dairy operations to safeguard water quality from nitrogen and phosphorus run-off, run-off, while not sacrificing the economic viability of the farm and making the farm a sustainable business.
Ben & Jerry's CSR Corporate Philanthropy •
Ben & Jerry’s also donates a portion of its pre tax profits to corporat corporate e philanthropy as part of its efforts to be more socially responsible. Corporate Corporate philanthropy is employee-led through the Ben & Jerry's Foundation and Community Action Teams (CATS) at each site
References •
Stanwick, P. A., & Stanwick, S. D. (2009). Understanding business ethics. Upper Saddle River, NJ: Prentice Hall.
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www.macrothink.org/journal/.../1604
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www.benjerry .com/ .com/
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vedan.com.vn / vedan vedan /index.php?q=node/242
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http://www.ehow.com/how_8348464_comm unicate-stakeholders-business.html
