Question

Business Roundtable Official Statement on the Purpose of a Corporation[5]

Read the following statement on the purpose of a corporation from Business Roundtable:

“Americans deserve an economy that allows each person to succeed through hard work and

creativity and to lead a life of meaning and dignity. We believe the free-market system is the

best means of generating good jobs, a strong and sustainable economy, innovation, a healthy

environment and economic opportunity for all.

Businesses play a vital role in the economy by creating jobs, fostering innovation and

providing essential goods and services. Businesses make and sell consumer products;

manufacture equipment and vehicles; support the national defense; grow and produce food;

provide healthcare; generate and deliver energy; and offer financial, communications and

other services that underpin economic growth.

While each of our individual companies serves its own corporate purpose, we share a

fundamental commitment to all of our stakeholders. We commit to:

• Delivering value to our customers. We will further the tradition of American companies

leading the way in meeting or exceeding customer expectations.

• Investing in our employees. This starts with compensating them fairly and providing

important benefits. It also includes supporting them through training and education that

help develop new skills for a rapidly changing world. We foster diversity and inclusion,

dignity and respect.

• Dealing fairly and ethically with our suppliers. We are dedicated to serving as good

partners to the other companies, large and small, that help us meet our missions.

• Supporting the communities in which we work. We respect the people in our

communities and protect the environment by embracing sustainable practices across our

businesses.

• Generating long-term value for shareholders, who provide the capital that allows

companies to invest, grow and innovate. We are committed to transparency and effective

engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future

success of our companies, our communities and our country.”

• Question: Does it appear that Shkreli, in the preceding pharmaceutical example, considered all the

stakeholders as the Business Roundtable Statement recommends, or did he follow the older.

• Question: Does it appear that Shkreli, in the preceding pharmaceutical example, considered all the

stakeholders as the Business Roundtable Statement recommends, or did he follow the older

shareholder primacy doctrine approach?

Answer 1

My Opinion:

It is true that Americans need an economy that would allow them to succeed. Every individual is supposed to work in an innovative and clearly defined economy where the believe on free-market presents an opportunity for all involved parties. For any economy to prosper, businesses are supposed to be allowed to function normally so as to ensure that they foster innovation and be in a position to offer services to essential goods. It is clear that businesses play a critical role in making and selling consumer products that manufacture the vehicles and equipment which ensure that there is availability of national defense and can manage to provide healthcare services to the population. From my research, I found that it is fundamental for one to hold and underpin the various economic services that are needed for growth. The American economy should ensure that they invest on workers are try to start compensating the entire population and fairly ensure that they promote important parts needed in the economy. The workers should always be supported through giving them the required education and training programs that may address the problems experienced by the population. Further, there should be an encouragement where the communities are supported and best practices embraced to ensure it is uniform across all business enterprises.

The purpose of most corporations is to increase the wealth of the corporations or firms. Firms are trying to raise the price of the stocks of the firm. This will lead to the maximization of wealth of the stockholders and the firms' worth also raises. The shareholders wealth is equal to the owners wealth, it is because the stockholders or shareholders are the owners of the firm. So, the main aim of any owner would be to increase their wealth. And the corporations are not non-profit organizations. Thus, the major aim of any corporation would be to expand the wealth of the shareholders. So, the statement is not trustable. The goals or aims of the corporations will not change, but some of the corporations might change. They are not improving, but trying to provide benefits to all the stakeholders of the firm. But the corporation's motive will not change.

Company CC:

The company CC created more economic benefits, employment opportunities, and supplied the consumer goods. The company CC provides good training to its employees to grow and develop in their field. But the company CC has used the natural resources more than the limit specified which is not good for the environment. It will spoil the environment and will cause more problems to the earth and the people living in the place where water is taken to produce the products. The company CC's products are causing health issues also. This will affect the people (consumers) who consume it. The company CC is the major rival in the beverage industry which is trying to beat all its competitors. So, the company CC is damaging the environment to fulfill its corporate objectives. They are not doing the business ethically. There are no sustainable practices followed by most of the corporations. They are working towards the wealth maximization only. The corporations may mention that they are following some of the sustainable practices. In reality, the corporations will not do it, but their only aim will be wealth maximization.

The statement is an improvement over the purpose or aim of firms, but it is not worth to believe. The acts of the firms or corporations proved that they will not change from their purpose. It is proven from the research done on the activities of the company CC.