Profit Motive Business 2

Not the only Obligation of Business

It is a quite common scene nowadays that after buying a product from a shop the consumer feels that he has been charged more by the seller no matter how sweetly the seller speaks or discount given by him. Consumers are never satisfied maybe because of the universal human nature to get satisfied only if others do not benefit from your action. I have done that too, but realized that even sellers are buyers at some time and their desire for higher profit (Profit is the amount of money a business retains for itself after costs, taxes and dividends have been removed from revenues.) (Boone & Kurtz 2002a) is not wrong. These profits enable businessmen to grow and give them opportunities to employ resources in meaningful ways. Profit gives strength to the business to engage themselves in activities related to social well-being. In today’s world business professionals, apart from earning higher profits, have taken the products of science and revolutionized the fields of agriculture, transportation, and medicine. They have taken the products of art and dramatically increased our access to them. We have more food, we are more mobile, we have more health care, we have more access to works of fiction, theater, and music than anyone could reasonably have predicted a few centuries ago. The result of business in the West, and more recently in parts of the East, has been an enormous rise in the standard of human living. Hence, with so many benefits offered to the society, it would be wrong to say that profit is the only motive of business; it does fulfill its responsibilities towards the society.

All those who are against the profit motive of business assert that businessmen forget about the society in their race to earn maximum profits. They have no concern for the well being of the society. However, it is due to these huge business corporations many of the world’s greatest health centers are running. Their massive donations help many rehabilitation centers through out the world. For example, Bill & Melinda Gates Foundation has pledged US$3 million and Amazon.com has raised more than $3.5 million in online donations to aid South Asian countries devastated by tsunamis. Businesses like these are giving greater importance to their social responsibility because they know that if they keep the public happy eventually their name will be held high. I think that business creates a cycle; the money comes from the consumers and goes back to them who need the most. Businesses in America have now become more service oriented. They are seeking different ways on how to serve people better. According to the U.K. Foreign & Commonwealth Office, “the honorary knighthood recognizes Gates' contributions to improving health and reducing poverty in parts of the Commonwealth and elsewhere in the developing world. Gates also was recognized for his contribution to enterprise, employment, education and the voluntary sector in the United Kingdom.” (Brandon Hill, 2005). Now day’s businesses are really concern about corporate philanthropy, which means “act of an organization giving something back to the communities by which it earns profits.” (Boone & Kurtz, 2002b). This includes cash contributions donations of income, and products, etc. All of this cannot be done without earning profits. But offenders of profit motive say that even these acts have a motive of earning higher profits in the long run; however, if business firms do not carry these acts then no one else will be able to donate so much.

Business 3

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Business 3

Protestors of business argue that profit causes businesses to think in the short-term. They look for profits now in spite of worrying about what will happen tomorrow, with disastrous consequences for a work force or the environment. However, this is not always the case because a sensible business will always plan way ahead into its future and those businesses who do not act according to a prescribed plan will soon destroy itself when its luck runs out. In the process of business planning the management also emphasizes on how the product will benefit the society and check whether the product is harmless or not; if the management fails to do so, it will surely lead to a failure of the business. “New economic, social, environmental and political realities present today's business decision-makers with unprecedented risks and opportunities. A growing number of leadership companies have begun to develop goals and strategies that recognize the importance of making and marketing products and services in ways that benefit both business and society. Evidence is mounting that companies acting responsibly well enjoy significant and long-term advantages.” (Altekoster, 2002). It is true that there have been cases where public has been harmed and businesses have profited, for example, cigarettes and alcohol, but these products are forced to display warning statements on their packages and even then people have them. At this point nor the businessmen neither their profit motive is to be blamed, instead the consumers should be blamed, who intentionally commit mistakes because the business supplies only what consumers want and if the consumer stops demanding, the production will automatically stop. Furthermore, companies like Toyota and Honda try to cut pollution by designing new technologies “The Toyota Prius and Honda Insight automobiles combine high efficiency gasoline engines with electric motors into hybrid car that generates less pollution. Each company has launched the cars by producing a few thousand and limiting their distribution until sales result indicate consumer interest.” Boone & Kurtz (2002c). This shows how concern are these big company’s about environment. Making these cars would have required them a great deal of research and finance. Moreover, they finally leave the decision in the hands of the public; if we demand they are ready to produce more of such cars.

Other criticisms of the describe capitalists as greedy and selfish - they charge high prices for products for their own self-interest. But this argument is not valid because in a free market economy where there is competition it is not the seller who decides on the price but it is the cumulative decision of the consumers. It is the demand of the consumers, which acts as a tool for the businessmen to decide the price and the amount of the product to be produced. “Every company’s greatest assets are its costumers, because without customers there is no company” (Michael LeBouef 1942). Sometimes when consumers buy a product and the next day they see the same product at a lower price at another shop. They just start cursing the seller of the former shop without realizing that the former shopkeeper must have got the product at higher price than the later shopkeeper. Moreover, sellers are well aware that charging high prices would lead to loss of customers to their competitors and in this competition the customer benefits and not the seller. Hence, they try to reduce the price as much as possible.

Business 4

“The European Commission’s Green Paper in 2002 has helped to fuel a debate about CSR (corporate social responsibility) which continues in seminars, universities, boardrooms and the media – including many letters to editors by some of the world’s leading entrepreneurs - household names. The Commission stated that the main function of an enterprise was to create value through producing goods and services that society demands, thereby generating a profit for its owners and shareholders as well as welfare for society, particularly through a continuing process of job creation. Note that the Commission supports the profit motive. Many in civic society do not. But surely profit is what keeps businesses alive and the jobs of their workers safe as well as the well being of the society and you cannot call it greediness or selfishness.” (Michael Lake 2005).

A huge part of the corporate profit is kept as retained earnings, which facilitate new innovations. Everyday in the newspaper one can see new technology is being invented. Although the firms earn huge profit out of new products, but ultimately it is the society who enjoys this product. The product is designed and made for the society so that it improves the society’s standard of living. The self-parking car invented by Toyota is a classic example. Toyota decided to save the parking trouble and invented a car that parallel parks itself. In such cases business, instead of seeing customer service as a revenue opportunity, they see it as a customer satisfaction opportunity. It won't bring instant profits, but it does build lasting customer relationships. We all appreciate when a brand new mobile with a new configuration is unveiled and crave for it. But when it actually comes to buying the product we put our hands back and instead of lauding the businessmen for such innovation, we curse them that he charges high prices for his products; he is selfish and greedy, they decide price according their own needs. I believe that this is a major crime, which the society commits against the businessmen.

Another function of business other than earning profits is to increase employment rate. Every country has a goal of decreasing their unemployment rate and businesses help to fulfill this essential goal of the government by increasing employment opportunities. Greater the number businesses more people will be employed. They are the source of income for thousands of people. If businesses earn high profits it would lead to higher income for the employee which will, in turn, raise their standard of living. Around 75% of the total employed people are employed by businesses carried out by the private sector in India. (Kamlesh Rajan 2005). It was said by the great writer Ayan Rand (Retrieved: 2005) that the employment created by the business has brought the world to a situation in which 90% live better than comfortably and 10% live near subsistence. And businesses haven’t given up on the remaining 10%.

Business 5

Corporate profits are the main source of revenue for the government. Higher the profits greater will be the tax, companies have to pay. This tax, in turn, is used for providing services to the general public for examples, building highways, roads, schools, etc. It is this profit, which is the driving force of the economy. That is why when a dispute occurred between the Ambani brothers (owners of India’s largest private sector enterprise), the finance minister of India Mr. Chidambaram asked them to sort it out as fast as possible because the stock market and government’s revenue greatly depends on them and their profit. 35 percent of the total domestic corporate houses’ profit goes as tax to the government in India. (Purshottum 2005), which is a major source of revenue.

With the above benefits of business everyone may agree to what one of the great businessmen Mr. William Clay Ford said, “There’s no incompatibility between doing the right thing and making money.” (1991). It is the profit, which allows businessmen to care about the society and divert their endeavors from earning more profit to serving and caring about the welfare of the society. And if the business does not care to serve the society or turns a blind eye to the needs and wants of the people it won’t survive. Responsibility, rationality, and cooperation have become core principles in any healthy moral system, and form the core principles of the business world. Hence, business has to have several motives other than profits to survive in today’s world.

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