Question

1. Arguably, the primary objective of a for-profit business is to make money. Might a commitment to a social mission help or hinder this objective? Why or why not?

2. Explain why priorities will vary based upon the interest and power of the stakeholder.

3. Describe how to prioritize stakeholder claims, particularly when they conflict

Answer 1

1. Yes, it is true that the primary objective of a for-profit business is to make money. Let us take both the sides of the effect of commitment to a social mission by a business -

HINDERS -

The company works on the concept of maximising revenue and minimising the costs to procure the highest profits possible for itself and its shareholders. In this case, the commitment to a social mission leads to transfer of money and resources towards an activity which is reaping no dividends. This would lead to an increase in the costs of the company and bring down the profits. Additionally, if the company's competitors are not engaging in a similar mission, it would also lose competitive and comparative advantage in the market.

HELPS -

The whole idea of a company engaging in a social mission is to look beyond short term costs and aim for long term gains. The brand value and the goodwill a company develops have proven to be the greatest gamechangers in terms of how consumers perceive and engage with a company. Committing to a social mission will show the company to be providing additional service to the community which will make the company seem more responsible and benevolent. This might in the future also leads to easy access to government subsidies for expansion of operations. This will also give the company a soft power edge over its competitors at a low cost. Hence, committing to a social mission shows that the managers understand economics in a more holistic sense and know how economics interlinks with emotions and norms of the society.