Question

The text, and our discussions, indicate that the explicit goal of a business should be to maximize its value to

owners

owners and workers

Owners and customers

Owners, workers, and customers

None of the above

Answer 1

The answer to the question is owners, workers and customers.

The primary purpose of a business is to maximize profits for its owners or stakeholders while maintaining corporate social responsibility.

According to economist Milton Friedman, the main purpose of a business is to maximize profits for its owners, and in the case of a publicly-traded company, the stockholders are its owners. Others contend that a business’s principal purpose is to serve the interests of a larger group of stakeholders, including employees, customers, and even society as a whole. Philosophers often assert that businesses should abide by some legal and social regulations.

Many observers would hold that concepts such as economic value added are useful in balancing profit-making objectives with other ends. They argue that sustainable financial returns are not possible without taking into account the aspirations and interests of other stakeholders such as customers, employees, society and the environment. This concept is called corporate social responsibility (CSR).

Organizations have their own purposes and objectives. An organization employs the function of organizing to achieve its overall goals. It can serve to harmonize the individual goals of the employees with the overall objectives of the firm. Individuals form a group, and the groups form an organization. Organization, therefore, is the composition of individuals and groups. Individuals are grouped into departments, and their work is coordinated and directed towards organizational goals. Effective organization allows a firm to achieve continuity, effective management, and growth and diversification, and optimize the use of resources and provide proper treatment to employees.