Essays on Profit Maximisation and Wealth Creation Article

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The paper "Profit Maximisation and Wealth Creation" is a wonderful example of an article on management. Yes, I do agree with Milton Friedman’ s argument that “ the primary objective of the managers is to increase the wealth of the shareholders and the owners, however under certain circumstances which include adhering to business ethics and laws. ” In an ideal situation what comes into the mind of the shareholder or the investor in that matter, while trying to do an investment is the value as an individual will get from such investment.

The value which the shareholder is interested in can be termed as the profitability of the business. However, in trying to achieve this goal, it is recognized that in any industry there are various stakeholders who are key partners and can influence one or the other the performance of the business. For example, in any business, there are employees who support the operations of the business and the community in which the business operates and whose lives can be affected by the business’ value chain activities. With this in mind, therefore, it emerges that as any manager struggles to maximize the company profits, he has some obligations to fulfill, and the higher the ability to manage these obligations and maximize the company profits, the better (Bejou 2011). The objective of this review The purpose of this discussion is to take a critical analysis on the thesis of Milton Friedman that, “ the primary objective of the managers should maximize the wealth of the shareholders and the owners of the business under the assumption that they adhere to the ethical norms and laws of doing business. ” In trying to support or discern this statement, the discussion will try and give an overview of what is Friedman is referring to as ethical and the different views the contemporary managers, have towards this thesis by Friedman.

The ethics and laws that Friedman is referring to are those principles and practices that the business is responsible for the society in the process of its activities. While developing this thesis, Friedman was of the view that if businesses could follow certain principles and practices, then there could be a situation where managers could engage in business vices like corruption and fraud as an effort to create for themselves some wealth.

However, despite the thesis by Friedman to try and explain what the role of the business should be, many scholars and managers have come to support and object his stand citing various reasons for that.

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, issue 10, pp 1-6.

Cosans, C. (2009). ‘Does Milton Friedman Support a Vigorous Business Ethics?’ Journal of Business Ethics, issue 87, pp 391-399.

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

Crisp, R. (2008). Compassion and beyond. Ethic Theory and Moral Practice, 11, 233–246.

Ferrell, O., and Ferrell, L. (2008). Business Ethics: Ethical Decision Making and Cases, 7th Edition (Houghton Mifflin, Boston)

Husted, B., & de Jesus Salazar, J. (2006). ‘Taking Friedman Seriously: Maximising Profits and Social Performance’, Journal of Management Studies, 43:1, pp 76-91.

Peinado-Vara, E. (2006). ‘Corporate Social Responsibility in Latin America’, The Journal of Corporate Citizenship 21(1), 61–69.

Shaw, W. (2009). ‘Marxism, Business Ethics, and Corporate Social Responsibility’, Journal of Business Ethics, 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, 82, pp 407-424.

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

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