The primary responsibility of Businesses is to increase the profit of Essay

The primary responsibility of Businesses is to increase the profit of their shareholders - Essay Example While others believe that the primary responsibility of any business enterprise is to maximize the profits of the shareholders, others feel that a business should go far beyond just profit maximization. Zain (2008) gave a comparison of the divergent views of Milton Friedman and Archie Carroll concerning the responsibility of business in a society. Friedman believes that the main responsibility of a business is to maximize the profits of the shareholders and the interest of the shareholders should be the many area of concern in any business industry (Zain, 2008). Theorists like Friedman leave it at that and argues that a lot of emphasis need only to be put in serving the interest of the shareholders who will only enjoy a handsome return. Others like Carroll go ahead to incorporate other social responsibilities that, they believe, the businesses should perform. Friedman asserts that the management in any business organization should fight to remove all the obstacles that could impede t he maximization of profits. The effect would be translated into overworking the employees of the organization or performing operations that would be hazardous to the environment and the entire community (Zain 2008). According to his reasoning, Friedman believes that provided the firms operate within the regulations that are provided for by the pre-defined legislation, and having taken into account the interest of the shareholders, all the other supposed roles will be automatically fulfilled. Friedman argues that if business organizations simply capitalize on profit maximization while operating under the established legal procedures, then the firm is assured continued life as there will be funds for inventory maintenance and expansion (Zain 2008). In his view, the management of a firm or business enterprise that engages itself in additional social responsibility may be faced with difficulties in executing its duties to be able to sustain the growth and development of the firm. Friedm an points out that â€Å"open and free competition without deception or fraud is the only responsibility of firms,† thus, social responsibilities tend to divert firms from making enough profits as demanded by shareholders (Zain 2008). On the other hand, Archie Carroll has larger view of the supposed responsibility of business. Carroll considers the roles played by businesses as four-fold and extends beyond the maximization of shareholder’s profit. In his view, business plays economic roles, ethical roles, legal roles as well as other voluntary roles that helps shape the society in general (Zain 2008). The first responsibility in this model is in line with Friedman’s profit maximization. To be able to contribute to the macro-economic development, businesses need to emphasize on the maximization of their profits by capitalizing on their strength and market opportunities. Businesses need to embark on thorough market and marketing research so as to identify what typ es of products to deal in, how much to keep in inventory and when to do so. Secondly, the government has the role of providing certain regulations in relation to the business activities to be undertaken as well as the mode of operations. Abiding by these laws and regulations is also a responsibility of business. As Zain (2008) described, â€Å"legal responsibilities are those that are defined by the authorities and firms are required to abide by them in a strict and disciplined manner.† The other set of responsibility that Carroll considers fundamental in the operations of a business enterprise is ethical responsibility. He believes there should be some set of moral standards from which the management of