MBAV 5101, STRATEGIC MANAGEMENT AND BUSINESS POLICY

UNIT III: COMPARISON 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. Summary of Milton Friedman's theory 2. Summary of Archie Carroll's theory 3. Principles implemented CSR theories at current my work. 4. Examples of organizations where Friedman's theories are applied. 5. Examples of organizations where Carroll's theories are applied. References
Nguyen Thi Phuong ID 217146 STRATEGIC MANAGEMENT AND BUSINESS POLICY - HAM#23-CITC

Summary of Milton Friedman's theory

Milton Friedman

"There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the 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 MANAGING INFORMATION TECHNOLOGY - HAM#23-CITC

Summary of Milton Friedman's theory

Friedmans central point. 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 postponed

Firms are responsible to only their shareholders

Purely economic reasoning

Summary of Milton Friedman's theory

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

Ethical

(Should Do)

Legal (Have to Do)

Summary of Archie Carroll 's theory

Business firms have four responsibilities (a) Economic
Produce goods & services of value to society so that the firm may repay its 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
Work with employees & community in planning for layoffs, though no laws requiring this Many people expect firms to do these things

(d) Discretionary
Purely voluntary obligations a firm assumes
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 with the development of 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 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 a disgusting smell. 2008 - That heavily polluted this river, caused immense damage to the residents living near this river.

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. It 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

Vedan CSR
The consequences
- suspended the plants wastewater discharge license - fined the company 127 billion VND - have to pay the cost of restoring the river, - have to construct a sewage treatment system in order to minimize the environment pollution. - Decline in revenue: Vedans operations were interrupted for a time. - People do not trust Vedan as before, some grocery stores and markets even boycotted all Vedan products. - Significant fall in both Vedan revenue and reputation.

Examples of organizations where Caroll's theories are applied

Ben & Jerrys is a Vermont-based manufacturer of ice cream, frozen yoghurt and sorbet, was founded in 1978 and was subsequently acquired by Unilever. "Business has a responsibility to the community and the environment" is Ben & Jerry's mantra and it certainly walks the talk when it comes to corporate social responsibility.

Ben & Jerry's CSR

Engaging the Community through Communitybased Projects
In the Vermont Dairy Farm Sustainability Project, which was launched by Ben & Jerrys 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, while not sacrificing the economic viability of the farm and making the farm a sustainable business.

Ben & Jerry's CSR

Corporate Philanthropy Ben & Jerrys also donates a portion of its pretax profits to corporate philanthropy as part of its efforts to be more socially responsible. 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. www.macrothink.org/journal/.../1604 www.benjerry.com/ vedan.com.vn/vedan/index.php?q=node/242 http://www.ehow.com/how_8348464_comm unicate-stakeholders-business.html