...MGMT 570 ISSUE PAPER ARE PROFITS THE ONLY BUSINESS OF BUSINESS? CONSUMER NOTIFICATION AND PRODUCT RECALL BY KOLAWOLE OLAYINKA 03/30/2013 ARE PROFITS THE ONLY BUSINESS OF BUSINESS? Supply and demand is at the root of everything, where exchange of goods and services is involved between producers and consumers for mutual benefits. These mutual benefits involve an exchange that provides value to the consumer and profits to the producer. It is not at all farfetched to think of these as basically human characteristics. At the beginning of a spectrum is the producer and at the end of the same, is the consumer. They interact with each other and with the governmental law regulating their transactions. In this economic system, what will be produced is determined by what will yield the greatest profit. From the readings, Milton Friedman and Robert Almeder recognize the merits of a profit-driven economic system. They do not quarrel over the importance of profits. But they do quarrel over whether or not business firms have obligations beyond making profits. A consumer may be a pet owner who feeds and provides care for a beloved animal, a doting grandparent who buys toys and clothes for the grandkids, an individual who wears contact lenses or hearing aids, a patient who buys prescription medications, or vehicle owner. Should a consumer have certain expectations from the suppliers and producers of the products that he buys? Can we trust corporations that they will not produce...
Words: 4161 - Pages: 17
...------------------------------------------------- Management Accounting ------------------------------------------------- AGSB (Regis – MBA Program) Business is not only for profit but for nation building In many organizations, businesses are built mainly for the purpose of profit generation. Most successful businesses are those who are successful enough to continuously generate sizable profits in their business activities. Business, according to Merriam-Webster Dictionary is a usually commercial or mercantile activity engaged in as means of livelihood. It is the nature of a business to generate profit for it to be sustainable and for it to survive. In many economically successful countries, nation building has always been given much importance. Patriotism has been deeply rooted in the beliefs and culture of these nations. An example of this is Japan. Japan had suffered severely during the Second World War especially after being hit by two atomic bombs. It was considered as one of the most damaged countries after the war. Yet, Japan emerged to be one the strongest economic superpowers today. The success of Japan is mainly attributed to the discipline and patriotism of its populace. The same could be said about South Korea, who was also devastated after the war, yet emerged to be one of the economic powers today. Business success and national economic progress has always been a positive correlation. In economic terms, one basis for national progress is increase in the...
Words: 571 - Pages: 3
... |Regis MBA | |Business is not only for Profit but also for Nation Building | | |SUBJECT SECTION TRIMESTER |DATE | | | | |TSMANACC R23 1st Term, 3-2011 |April 19, 2012 | |SUBMITTED BY: |PROFESSOR | | | | |Claudette D. Maan |Prof. ELISEO A. AURELLADO, Ph.D | I have always dream of owning my own business but, unfortunately, until now it is still a dream. Becoming the next Bill Gates or Warren Buffet really tickles my fancy. I admire them not only on their brilliant business acumen but also on their philanthropic initiatives. Owning a business is not only about...
Words: 287 - Pages: 2
...that: “the only responsibility of business is to increase its profits”? Today we live in a world were companies are major actors and influence society on many levels. This is why ethics were brought into the business world. Ethical enterprises follow certain values and moral beliefs and were created with the supposed intention of using that influence in a positive way and protect what surrounds them, whether it is the people who work for the company, the rest of society, the environment etc. Ethics helps companies distinguish what’s wrong or right in a certain situation and act upon it. It bases itself on the idea that a corporation is somewhat responsible for how it affects others, hence the term ‘corporate responsibility’. (Banerjee, 2007) But with time and experience it seems that ethics, although created for a noble purpose, can and are actually used by companies for purposes other than just helping others. The economist Milton Friedman believed that all this social work is the state’s responsibility and a political matter, and that it can induce losses in profit for a company, going against the essence and purpose of a business. He argues we might be better off without it. (1970) This rather negative portrayal of something that was created to do good, although quite realistic, can be discussed and hopefully re-arranged so there is hope that a company can be both socially responsible and profitable. According to Bakan (2004), “if a corporation can do good only to help itself...
Words: 2888 - Pages: 12
...social responsibility of business and the corporate social responsibility of the business. According to Friedman, the social responsibility only is to make the profit. “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (Baker, 2015). I do not agree with this statement under the stakeholder theory, I will explain the reason relate to the stakeholder theory. Explain this statement In this statement, “There is one and only one social responsibility of the business to increase the profit” In this sentence, we can see that the only social responsibility is to make the profit, whenever do the untrue things for personal gain. For example, to stolen competitor’s product to make the product. “The rules of the game, which is to say, engages in open and free competition without deception or fraud”. These rules is about side-constraints of the business, the company need to follow the rules, and they not be deception or fraud to become the free competition. Analysis of this statement By definition, stakeholder are the individual or groups that have an interest in the organization and are affected by its action. Actually, A corporation have can have legal, but also moral responsibility. “If the business wants to be sustained over time, must maximize its profit but do so in a manner...
Words: 517 - Pages: 3
...an unincorporated business that is owned by only one person, this is the most common and simplest business to create. There are several advantages to a sole proprietorship these include that all of the management and decisions rest with one individual, all of the profits belong the business owner and the owner can utilize these profits as deemed necessary without consulting any other party and that all of the income is taxed as personal, so the owner only has to worry about one tax liability. Along with the advantages there are also several disadvantages these can include limited financial and professional resources along with unlimited liability for debts related to the business. • LIABILITY – With a sole proprietorship the business owner is responsible for all of the assets and debts of the business. In the event of a failure creditors can come after both personal and business assets. • INCOME TAXATION – The business owner and business are taxed as one entity, all of the profits are treated as personal income. The business owner can reduce some of the taxable income by writing it off as a business expense. • LONGEVITY – Without adequate planning the business could cease to exist with the death of the business owner. There must be extensive legal and financial planning for a business to survive in the event of the owner’s death. • MANAGEMENT – The owner has full control over all decisions regarding any operation of the business. • PROFIT DISTRIBUTION – All...
Words: 2111 - Pages: 9
...a sole proprietorship, the business and single owner are one in the same. A single owner makes all decisions with regard to the business and the single owner retains all profits earned by the business. The single owner is also responsible/liable for all debts and obligations of the business on a personal level. | Two Advantages | A sole proprietorship is easy to create; there is minimal creation cost and time.The single owner has autonomy in decision making; sole owner makes all decisions related to the business and has complete ownership of business’s finances. | Two Disadvantages | It is impossible to add additional owners and to pass on business, business dies with owner. A single owner faces challenges with raising working capital and all loans made for the business are the personal responsibility of the owner. In addition, the single owner may be sued personally for the business’s liabilities. | Liability | Liability is unlimited; obligations of the business are personal obligations of the owner. The single owner is 100% personally responsible for business liabilities and debts. All of the owner’s personal assets are subject to lawsuit(s) made against the business. | Income taxes | The business itself does not file a tax return. There is no legal distinction between the owner and the business. All income earned by the business is considered personal oncome by the owner. Owner faces a higher rate of taxation because all business profits are considered personal income...
Words: 2283 - Pages: 10
... SOLE PROPRIETORSHIP: It is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self contractors or business owners. The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is obtaining capital funding. - Liability: The owner is personally liable for claims against the business. If a sole proprietorship losses a lawsuit or otherwise finds itself in debt, not only will the business be liable for the debt, but the owner will be as well. - Income Taxes: As a sole proprietor...
Words: 1831 - Pages: 8
...Part A: SOLE PROPRIETORSHIP: This business type is basically a business with one owner. Give a company a name and starting a sole proprietorship is simple. With this type of business all profits are the owners, but the burdens and liabilities are also the owners’ responsibilities. * LIABILITY- The liabilities are extremely high, from personnel injuries, to debt unpaid. If any part of your business suffers financially and not dealt with, the personal assets of the owner can subject to being taken to cover any unpaid bills accrued. * INCOME TAXES- The tax rates and fees of a sole proprietorship are much lower. As a sole proprietorship personal incomes and business income taxes are filed as one. * LONGEVITY/CONTINUITY- If the profits of the business are high and well ensured the length and success can be high. Although the length of the business merely depends the owner. * CONTROL-The owner is the only one the holds the power and control. All decision makes comes from only the owner of the proprietorship. * PROFIT RETENTION- All income produced by sole proprietorship has to be reported to the IRS as income whether it is used for the business or for personal use. Either way the profits can be spent any way the owner wishes. Profits don’t have to be shared. * LOCATION- In the state of Washington the costs of a sole proprietorship are low. There are no legal required documents to file to begin business. Although form-filling must be done in order to operate...
Words: 1844 - Pages: 8
...Proprietorship A sole proprietorship is a business that is owned by one person. This person may operate the business or he/she may contract the work out to another individual. The owner makes all the decisions concerning the business regardless of who actually performs the work. The limitless and peerless accountability is one of the key characteristics of the sole proprietor. Advantages of a sole proprietorship Some of the advantages of a sole proprietorship are the simplicity and autonomy of starting and maintaining a business. Once all of the proper state and local licenses and permits have been applied for the business is now operational as the sole owner sees fit. This also leads to a flexibility that allows the owner to make decisions as he/she chooses. Another advantage is sole gain. Since there is only one owner, then there is only one person to gain from the profits. Disadvantages of a sole proprietorship Oddly enough, the disadvantages of a sole proprietorship stem from the very reason that makes it so attractive – the complete identity of the business with its owner. If the owner does not already have the personal wealth needed to start up a business, he/she may find they have limited resources. If the sole proprietor seeks funds from outside investors, then the business ceases to be a sole proprietorship. This is the reason sole proprietorships tend to be restricted to small business ventures. Another disadvantage is the business is limited to the knowledge, skills...
Words: 3217 - Pages: 13
...The Social Responsibility of Business is to Increase Profit What is the social responsibility of a business? Is it to increase profits as American economist Milton Friedman argues? Is it to make decisions that benefit and protect society? According to the Dictionary of Finance and Investment Terms, social responsibility is the “principle that businesses should actively contribute to the welfare of society and not only maximise profits”. In my view the statement ‘the social responsibility of business is to increase profit’ is true to an extent, however, I believe a corporation’s responsibilities extend beyond just maximising profits. The ‘Narrow View’ argues that profit maximisation is the only objective for a business. Theodore Levitt wrote, “in the end business has only two responsibilities- to obey the elementary canons of face-to-face civility (honesty, good faith and so on) and to seek material gain” Levitt’s opinion could be perceived as realistic to an extent, however, I believe he doesn’t take into account the negative side-effects that business activities can have on society. Friedman strongly rejects any concept of corporate social responsibility that would deter a business’s primary goal of profit maximisation. Furthermore, he argues that only people can have responsibilities, not an artificial being such as a corporation. If an artificial being such as a business was to have responsibilities, however, than I would find it appropriate that it would be inclined to...
Words: 759 - Pages: 4
...of business. The business and the owner are the same. That means all debts and liabilities are the responsibility of the owner. The advantage of this form of business is that it is so easy to start. Basically, you just start selling stuff or providing a service. Of course, if permits or special licenses are needed, you still have to get those. The disadvantage is that you can't bring in a partner because there can only be one owner. Liability: The owner is personally liable for all losses, debts, and liabilities. Income taxes: There is no difference between the business owner and the business, all income earned by the business is the same as personal income to the owner. Longevity or continuity of the organization: Duration of the business is dependent on the owner. If the owner becomes dies or becomes incapacitated, the business will normally cease to exist. Control: The owner has complete control over all decisions regarding the business. Profit retention: All profits and losses pass through to the owner and are taxed only once at the individual tax rate which enable them to keep more of the profits. Location: A sole proprietorship is easily expanded or moved to another state. A DBA needs to be registered in each state, along with filing taxes in each state if required. Convenience or burden: No permission from anyone is needed to form a sole proprietorship. There are no extra tax forms to file for the business. Raising capital to keep the business running...
Words: 1209 - Pages: 5
...are your own business entity. You own and run your company, which means you are in complete control and assume sole responsibility of all legal and financial matters. • LIABLITY – There is no differentiation between the business and the owner, as they are one in the same. Therefore the business/owner takes full accountability and has limitless liability for all gains and losses the business obtains. • INCOME TAXES – All business revenue and overhead are considered personal income and have to be reported as such to the IRS on taxes as they cannot be taxed separately. • LONGEVITY/CONTINUITY – The business is only in existence while the owner is actively running it. Should the owner retire or pass, the business ceases to exist. • CONTROL – Since the business has one sole owner, it cannot be passed on to another individual for control. • PROFIT RETENTION – The business/owner retains all revenue. • LOCATION – You are not restricted on where you can operate your business. Depending on the states you expand to, you will be required to register your business with the state agency so it is known who is liable for any incidences. However, if you decide to use your name as the company name, most states will not require any registration. You just need to check with the state agency for their policies. • CONVENIENCE/BURDEN – The business can be established just by doing business. As long as you follow state requirements based on the industry of your business, i.e. permits...
Words: 3366 - Pages: 14
...of business. The business and the owner are the same. That means all debts and liabilities are the responsibility of the owner. The advantage of this form of business is that it is so easy to start. Basically, you just start selling stuff or providing a service. Of course, if permits or special licenses are needed, you still have to get those. The disadvantage is that you can't bring in a partner because there can only be one owner. Liability: The owner is personally liable for all losses, debts, and liabilities. Income taxes: There is no difference between the business owner and the business, all income earned by the business is the same as personal income to the owner. Longevity or continuity of the organization: Duration of the business is dependent on the owner. If the owner becomes dies or becomes incapacitated, the business will normally cease to exist. Control: The owner has complete control over all decisions regarding the business. Profit retention: All profits and losses pass through to the owner and are taxed only once at the individual tax rate which enable them to keep more of the profits. Location: A sole proprietorship is easily expanded or moved to another state. A DBA needs to be registered in each state, along with filing taxes in each state if required. Convenience or burden: No permission from anyone is needed to form a sole proprietorship. There are no extra tax forms to file for the business. Raising capital to keep the business running...
Words: 1635 - Pages: 7
...can lose not only the money initially invested in the business but also personal assets. * Income Taxes – Due to you being the sole owner there is no separate business income tax filing for a business under Sole Proprietorship. Business income or loss is reported on the sole proprietor’s personal tax return, and any tax is paid at the individual level. * Longevity / Continuity - The Sole Proprietor is the sole owner, with no partners in the business, if the Sole Proprietor becomes disabled, retires or dies the business is dissolved. A business operated under Sole Proprietorship does not offer the perpetual existence of a corporation. * Control – Control of a business that is under sole proprietorship falls under the sole owner. Under a Sole Proprietorship you are not permitted to bring in any business partners, if you do then this would become a General Partnership Business. * Profit Retention – All profits gained under Sole Proprietorship belong to you the owner. However, you are also responsible for any bills incurred prior to any profit being taken. * Location - Expanding or moving a business that is under “Sole Proprietorship” is not very complicated. To move, you register your name or the business’ name to the state you are moving to. The only rule for a business that is operating under Sole Proprietorship is that it must be formed in the United States. Using a Doing Business As “DBA” name allows a Sole Proprietor to legally do business under a name...
Words: 1901 - Pages: 8
