Friedman Vs Almeder Analysis

What do you think about the social responsibility of businesses? Do you think they have certain social requirements or should the main objective of a business be to make money? This is a very in-depth and valid question in which both Milton Friedman and Robert Almeder have strong opinions. Although their opinions are polar opposite they have valid arguments. The objective is to analyze both opinions from their perspective point of views based on the examples given in the text. A mixture of both positions would provide a common ground for all people involved. Friedman specifically states that the main objective of business is to maximize profits in any way, shape, or form as long as it is legal. Under the Friedman doctrine, the stockholders
hire CEO’s and to be an effective CEO you must make maximum profit. That is their duty to the owners, which are the stockholders. Stockholders hire these individuals to serve their interests and spending money on social issues is not the objective. As far as the topic of social responsibilities, Friedman believes it is the people, not the business, that have a duty to society. How can business have the social morals when morals are ever-changing? Morals for one person may be very conservative while the next persons may be very liberal. Even philosophers cannot agree on what morals are socially and politically correct. So why should businesses be responsible to implement certain morals that nobody can agree on? This would reduce profit while potentially upsetting the stock holders. It makes very little sense for businesses to do that. A perfect example of the Friedman doctrine in use in today’s world is Wal-Mart.
In an article entitled “Wal-Mart’s Project Impact: A Move to Crush Competition”, states that in the current recession, Wal-Mart is out to search and destroy any surviving competition left to the giant superstore. The giant superstore is on a campaign, “Project Impact”, in which they plan to remodel their stores into cleaner, more maneuverable businesses in order to increase the shopper experience. Wal-Mart has run four of the top five toy retailers out of business, leaving Toy “R” Us as the only one standing. They also report in the article that this remodeling project will effectively leave Kmart and Rite Aid on their last leg. With businesses like Circuit City and Michael’s in the decline, Wal-Mart seeks to upgrade their store in these areas to take advantage of their competitor’s slump. The campaign will remove more of the competition but in a more subtle way that is not so obvious to the general public. This will divert some of the negative opinions that are associated with a mega discount store like Wal-Mart but still ensure that they will gain more of the markets customers once failing companies finally go out of business. Although the initial cost of this project in enormous, if it succeeds Wal-Mart would seemingly have a monopoly in super market commerce. This act will maximize Wal-Mart’s profit, which is Friedman’s main
objective.
On the other hand, Robert Almeder takes an opposite approach to the social responsibilities in business. He believes that business should have certain obligations to society. An example would be the moral obligation of a company to report and recall defective products or those that may be unreasonably dangerous. Firestone Tire and Rubber Co. had several instances, in the past, where their tires were defective. The only way they will recall this item is if the projected lawsuits cost more than the projected cost of replacing the faulty goods. Not recalling these goods initially can and will cause deaths and/or serious injury. This can be considered negligence and in some cases even murder. In Almeder’s view the company should recall the product as soon as they know the tire is faulty. Another example would be companies disposing of potentially dangerous material in third world countries. For example, certain oil companies in South America have been caught, in the past, dumping toxic chemicals, such as carcinogens and mutagens, into the water supply. Both Carcinogens and Mutagens are known to cause cancer because they alter the way a human’s DNA is composed. These chemicals killed animals, created toxic land, and caused an overall deterioration of the environment. It was a huge domino effect that harmed both the rural and urban population because crops that were grown on that polluted land were then transported and sold within the closest city. The ingestion of food that has been grown on the toxic land has lead to pregnant women giving birth to babies with birth defects such as extra appendages. This practice is hurting the overall condition of our world, its environment and its people’s lives; therefore this act should be stopped immediately, for the sake of mankind. That is the company’s social responsibility Almeder speaks of. Even though morals are ever changing, the general consensus would agree with Almeder’s in cases such as the Firestone Tire and Rubber Co. and oil companies. Overall, if enough damage is done then more attention is drawn to the offending company causing money, not only to repair its image but also to settle the hundreds of lawsuits that will eventually arise due to the negative publicity.
Freidman and Almeder have very valid points in both of their arguments. Businesses should maximize profit, but in my opinion, the entrepreneurs do have a responsibility to society. Their businesses should be created from conception to be socially responsible. These ideas should be built into their policies and procedures. A business should have the goal, in conjunction with maximizing profit, to become a socially conscious, philanthropic company responsible to not only it’s customers and shareholders, but also to the cities in which it affects. I’m all about making money however, if the company makes a mistake that is harmful in any way to the public, the company should fix that mistake, plain and simple. More companies should follow idea behind Whole Foods Market who judges their success by how much worth they can create for the company’s most significant stakeholders: customers, employees, investors, vendors, communities and the environment. Regardless of how it’s stated or restated, a mixture of both objectives would provide a common ground for all people involved.

References
Almeder, R.
(2008). Morality in the marketplace: Reflections on the Friedman doctrine. In F.J. Bonello & I. Lobo (ED.), Taking sides: Clashing views on economic issues (13th ed.) (pp. 10-18). Dubuque, IA: McGraw-Hill Contemporary Learning Services.
Friedman, M. (2005). The social responsibility of business is to increase its profits. In C.M. Boardman & A.N. Sandomir (ED.), Foundations of business thought (pp. 182-186). Boston: Pearson Custom Publishing.
Gregory, S. (Sep. 9, 2009). Walmart’s Project Impact: A Move to Crush Competition. Yahoo
News.