Is Maximization of corporate profit the mission or main purpose of a corporation? What are other “purposes” and obligations? Present an in-depth “Ethical Guidebook” for executives and managers in a large corporation. Give your comments or examples which supports this case.
This post will be end on 28th monday midnight. The leader of this post was Hema Madda.
The blog discussion was extented one more week upto 5th Monday Midnight.
I still think the main objective of most corporations is to make a profit. I also think a good example that demonstrates this theory is labor laws. That’s labor laws in the U.S. (why they were established) and countries where labor laws don’t exist…where outsourcing has occurred. So is outsourcing related to international trade relations?..yes…however, i also firmly believe it’s directly related to PROFIT margins.
Profit maximization is not always the primary goal. The corporation should try to create value for all of its constituencies. From an investor’s perspective, the purpose of the business is to maximize profits. But that’s not the purpose for other stakeholders, for customers, employees, suppliers, and the community. Each of those groups will define the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate.
http://www.reason.com/news/show/32239.html
I think that the objective of corporations is not to maximize profit, but to mazimize wealth. The maximization of wealth and the mazimazation of profit are not one in the same. The maximazation of profit means that the corporation is only worried amount minimizing the costs and maximizing the revenue. A corporation needs to be able to create wealth in an economy. One way a company can do this is to put money back into itself and to put money into its neighborhoods. A company can put money in a neighborhood by opening a new store or factory. A company that doesnt lay off employees to maximize the bottom line will eventually create more wealth than a company that is only worried about the bottom line.
That is a very good answer. In the last class period, we talked about how company wealth is worth a lot more than company profits. If you have company wealth, you can potentially sell it off for a lot higher price. If you have company profits, it can change in value overnight.
I agree Sam. Companies that look at the long term will end up better in the long run. If they just look at maximizing their profit by laying off employees or outsourcing all of their work they probably won’t be that successful in the long term.
Maximization of corporate profit should be the mission of a corporation and not the main purpose. Mission’s change priority and do change if things do not work out, but it is good to have a set goal.
If it is made into the main purpose of the corporation, then it is set to fail. Greed is a sickness that will take a corporation down hard. WorldCom – reported expenses as investments aiding in the biggest bankruptcy in history. Enron – Hid $1.7 billion in losses through “special purpose entities” pocketing hundreds of millions. Shareholders lost over $50 billion.
Maximization will have value if kept bounded and controlled.
I disagree with you Xavier. A mission is what the company stands for and what it strives for. A company that starts out with a mission that strives for money will not succeed in the long run. In fact, I think it the opposite, corporate profit should be one of the purposes but not the mission. I understand money is needed for a company to run, but I believe money will come if the company sticks to its plan and mission.
I don’t think that maximization of corporate profit should be the mission or the main purpose of a corporation. I think when money becomes the main focus of a company, greed will inevitably come. I think the company’s main purpose should be to provide a service in an ethical manner.
From the website http://managementhelp.org/ethics/ethxgde.htm. “Doug Wallace asserts the following characteristics of a high integrity organization:
1. There exists a clear vision and picture of integrity throughout the organization.
2. The vision is owned and embodied by top management, over time.
3. The reward system is aligned with the vision of integrity.
4. Policies and practices of the organization are aligned with the vision; no mixed messages.
5. It is understood that every significant management decision has ethical value dimensions.
6. Everyone is expected to work through conflicting-stakeholder value perspectives.”
I think if these characteristics are followed then a company will be successful and money will surely follow.
Privately-owned companies have no obligation to serve anyone but themselves and to blindly seek profits. I do think that this decision will cause the business to severely limit its potential and lifespan by ignoring other factors. In my mind, the corporation must be ready to serve EVERYONE – employees, patrons, the environment, government agencies, et al. – in order to live.
Employees are the organs of a business, and if they are all healthy, then the corporation will live happily. The customer is the food and water of the business body that nourish and sustain. The environment and other external influences are the air that the business breathes in order to sustain itself; if the air becomes polluted, then the body can live on, but the quality of life will be greatly affected.