17. Morgan Freidman—To maximize profits Friedmanism- the theory that the sole responsibility of a corporation is to optimize profits while obeying the law. Friedman argues that managers are the employees of a corporation’s owners and are directly responsible to them. Stockholders want to maximize profitsso the managers sole objective is to accommodate them. If manager spends corporate funds on social prjects, he or she is diverting shareholders’ dollar to programs they may not even favor. “Taxation without representation” is wrong. 18. List 2 principles of corporate responsibility (list only no need to describe) Corporations are economic institutions run for profit. All firms must follow multiple bodies of law Managers must act ethically Corporations have a duty to correct adverse social impacts they cause Social responsibility varies with company characteristics Managers should try to meet legitimate needs of multiple stakeholders Corporate behavior must comply with an underlying social contract Corporations should be transparent and accountable 19. Define external cause and give an example. External cost- a production cost not paid by a firm or its customers, but by members of society. Ex. Pollution is an example of an external cost of factory production. 20. What does it mean when you look at the narrow response to CSR and expansive response to CSR pg162
Narrow response- Obey the law, deny further obligations, and make profit. Expansive response- Anticipate new demands alter behavior before any pressure; embed management systems and processes to implement CCSR. 21. Please summarize Bill and Melinda’s case as in the textbook. Pg157 The Bill and Melinda ‘s case is about how Bill Gates became a Billionaire and first establish the William G. Gates foundation which his dad helped him funded with 94 million dollars which eventually evolved to the Bill and Melinda Gates Foundation which included his wife’s name. The foundation was helped later on by Warren Buffet, the second richest man who endowed them with 31 billion dollars. Even though the foundation helped many people, it had enormous social problems. Poverty and disease defy solution. When infant lives saved by vaccination, but die from common diarrhea because the lack of doctors and nurses. Spending 1 billion dollars to make school betters only to find that analysis showed that attendance, graduation rates and test scores were lower than similar schools not funded. However because gates was a man pursuing to saved lives, in 2009 he arranged a series of small dinners attended by fellow billionaires that was ask to pledge the majority of their wealth to charity during a lifetime or at death. 40 billionaires joined in “giving a pledge” after it was formalized.
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