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Society in which it operates.

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MMM 132 Group Research Assignment Semester 1, 2004 "Social Responsibility" refers to the degree to which an organization should be responsible for the society in which it operates, therefore the organization recognizes its "stakeholders" and acts for the good of all. Commonly defined as a "business firm's obligation that is beyond that required by the law and economics in order to pursue long-term goals that are for the good for society." In order to understand social responsibility with greater detail we can compare it with two similar concepts: Social Obligation and Social Responsiveness. Social obligation is defined as the "obligation of a business to meet its economic and legal responsibilities", put simply the organization must meet its economic (profit-orientated) and legal (laws governing conduct of business) needs. Examples of this are through some oil companies whereby they are under strict supervision from the government and related statutory bodies whereby they only comply with the minimum required by the law. I.e. the company pursues its social goals subject to the extent that they contribute to its economic goals. ...read more.


Within Social Responsibility there are two opposing views that differ greatly from each other. On one side there is the classical or purely economic view that management's only social responsibility is to maximize profits. On the other hand socioeconomic stance, which holds that management's responsibility, goes well beyond making profits to incorporate protecting and improving society's welfare. The Classical view refers to that "management's only social responsibility is to maximize a profit" that is the manager is responsible to ensure greatest return on investment (ROI) for shareholders in order to earn the highest profit for the given firm. The most outspoken supporter of this approach is economist Milton Friedman that was constructed within the 1960's. Mr. Friedman strongly argues that manager's primary responsibility is to operate the business in the best interests of the shareholders that are the true owners of a corporation. Furthermore, he states that shareholders have single concern and should be concentrating on financial return along with arguing that when managers decide on their own to spend their organization's resources for the "social good", they are adding to the overheads of doing business. ...read more.


The socioeconomic position refers to "the view that management's social responsibility goes well beyond the making of profits to include protecting and improving society's welfare." I.e. making profit is second priority while first priority is concerned about the survival of the organization. In this case survival means looking at the long term, whilst organizations which focus on sacrificing "social responsibility" may make short-term profits, however face increase costs in the long term. This was portrayed by the Manville Corporation in the U.S whereby one of its products, asbestos caused several fatal deaths to employees due to lung disease. From a management stance they decided to conceal information from affected employees simply due to maintaining their profit margin. In court a lawyer said, "Do you mean to tell me you would let them work until they dropped dead? The reply was "yes, we save a lot of money that way." In the short term this was true, however it certainly was not in the long run and as a result the company was forced to file for bankruptcy. This is an illustration of what can happen when managers take a short term perspective. Printed on: 5/9/2007 1 Created By: Charles Davison DACDD41 ...read more.

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