Social Responsibility and ethics in Strategic Management

1. Title Page
Social responsibility and ethics in Strategic
Management.

2. A Summary of Milton Friedman’s Main Points
• Friedman argues against the concept of social responsibility.
• Friedman argues that a business person who acts “responsibly” by
cutting the price of the firm’s product to prevent inflation, or by
making expenditures to reduces pollution, or by hiring the hard-core
unemployed, according to Friedman, is spending the shareholders
money for social interest.
• Friedman further his argument with this assertion “There is one and
only 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.

3. A Summary of Milton Friedman’s Main Points
(Contd.)
• Friedman argue that even if the businessperson has shareholder’s
permission or encouragement to do so, he or she is still acting from
motive other than economic and may, in long run, harm the very
society the form is trying to help.
• He added that, by taken on the burden of these social costs, the
business become less efficient-either price go up to pay for the
increased costs or investment in new activities and research is
postponed.

4. A Summary of Archie Carroll’s Main Points
• Archie Carroll proposes that the managers of business organizations
have four responsibilities: economic, legal, ethical, and discretionary.
• ECONOMIC responsibilities of a business organization’s management
are to produce goods and services of value to society so that the firm
may repay its creditors and shareholders.
• LEGAL responsibilities are defined by governments in laws that
management is expected to obey.
• ETHICAL responsibilities of an organization’s management are to
follow the generally held beliefs, about the behavior in a society.

5. A Summary of Archie Carroll’s Main Points
(Contd.)
• DISCRETIONARY responsibilities are purely voluntary obligations a
corporation assumes. Examples are philanthropic contributions,
training the hard-core unemployed, and providing day-care centers.
• Carroll lists these four responsibilities in order of priority.

6. The Principle I would like to implement in my
current place of work.
• I will prefer to implement Archie Carroll’s principle in my present
place work, this is because I believe that a business organization must
not only be concern on profit maximization alone but must also be
concern about its corporate social responsibility, corporate citizenship
and sustainability .
• A business entity should responsible enough to be concern with the
concept of environmental sustainability (i.e. Pollution control) and on
impacting the life of individual and making positive impacts in the
communities.

7. Two Organizations that applied Friedman’s
theories .
• Most business organizations in developing economy of Africa and Asia
applied Friedman’s theories, as the issue of environmental
sustainability means nothing to them, the only thing they focus on is
profit maximization. Examples of these organizations are:
• Dangote Cement Plc. This multi million dollars company is the major
producer of cement in Nigeria but despite the huge profit this
organization in making, the company is not given anything back to the
societies, the location of organization is within a rural area that
cannot boast of good schools, low standard of living, lack of
infrastructural facilities. This company did nothing to assist .

8. Two organizations that applied Friedman’s
Theories (Contd.)
• Another organizations that applied Friedman’s theories is Sona
Breweries Plc, this company also focus on profit and have no program
on corporate responsibility.

9. Two Organizations that applies Carroll’s
Theories
• CISCO: When Cisco system decide to dismiss 6,000 full times employees. It
provided a novel severance package. Those employees who agreed to work for a
local non-profit organization for a year would receive on-third of their salaries
plus benefits and stock option and be the first to be rehired. Nonprofit were
delighted to hire such hire such highly qualified people and Ciscso was able to
maintain its talent pool for when it could hire once again.
• General Mills: As a result of drug barons war going on Hawthorne. Executives of
General Mills became concerned when the murder rate in Hawthorne reached a
record high in 1996. The company headquarter was located just five miles away
from Howthorne, then the city most violent neighborhood, working with law
enforcements, politicians, community leaders and resident. Working with law
enforcement agencies, politicians, communities leaders, and residents, General
Mills spent $2.5 million and donated thousand of employees hours to help clean
up Hawthorne.

10. Two Organizations that applies Carroll’s
Theories ( Contd.)
Cracked Houses were demolished to make way for elementary school,
dilapidated houses rebuilt, Grants were given to people to buy houses
in Hawthorne. This impact reduces the rate of homicide from 70% to
32% in 2013. This is indeed is a great corporate responsibility by
General Mills.

11. References
• Thomas L. Wheelen, J David Hunger, Concepts in strategic
Management and Business Policy, Twelfth Edition(2012), Pearson, NJ