Question

1. A company has chosen to contract only with companies (subcontractors) that agree to adhere to a strict code of business ethics and social responsibility.  How might this stance increase their bottom line (profit)? How might this decision prevent the company from maximizing profits?  Be specific. Give examples. This question is worth 25 points.

2. Respond to the following statement: " Social responsibility is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems ."  Do you agree or disagree?  To what extent is a corporation responsible to be socially conscious?  This question is worth 25 points

3. According to Pitter Draker, structure is a tool to achieve short and long term goals of an organization. Provide an example of when a rigid, highly bureaucratic structure would be better suited to meet an organization's objectives compared to a more loosely defined, more organic structure. This question is worth 25 points.

Answer 1

1.

When a company becomes selective this way (to work with only ethical companies), it pretty much reduces their scope of choice when it comes to partnership. The challenge with this approach is that many companies claim to ethical and socially responsible. However, not every social responsible activity is relevant for every other company.

A socially responsible company usually have higher degree of management involved. As a result, the cost of their products and services are more expensive than the others. This means that when a company chooses to contract with only the companies that are socially responsible their cost of raw materials and ingredients become higher. As a result, this impacts their cost of operation and reduces the bottom line.

A profit maximizing company works towards minimizing cost. Obviously working with only socially responsible company may prevent the organization from minimizing their cost optimally. This is why their effort in maximizing profit also is prevented.