GM506 DISS1

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School

Purdue University *

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GM506

Subject

Management

Date

Nov 24, 2024

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docx

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Uploaded by DrDinosaurPerson592

There are several reasons why "shareholder wealth maximization" cannot be the only goal for a company. Firstly, companies impact stakeholders such as customers, employees, suppliers, and the environment. Prioritizing shareholder wealth maximization alone might lead to these stakeholders' exploitation and negative impacts on society and the environment. Secondly, companies are not separate entities from society. They operate within an organization and contribute to improving society and the environment. Therefore, practicing social responsibility is essential for a company to maintain its legitimacy and reputation in the long term. It also helps in building customer loyalty and attracting talent. One real-world example of a company practicing social responsibility is Patagonia. Patagonia is a clothing company that encourages customers to repair and reuse old clothes instead of buying new ones. They also participate in environmental activism and encourage customers to make environmentally-friendly choices (Patagonia, 2023). Patagonia donates 1% of its sales to protect the environment, which has helped to preserve wildlife, protect ecosystems, and reduce pollution (Patagonia, 2023). I believe social responsibility benefits various stakeholders, such as the environment, local communities, employees, and customers. For example, Patagonia's environmental activism efforts have benefited the environment, the local communities, and environmentally conscious customers. According to Greenberg and Colleagues (2017), social responsibility can enhance a company's long-term performance and reputation by fostering trust, loyalty, and customer satisfaction. Practicing social responsibility is not the same as practicing "ethics." Social responsibility concerns a company's responsibility to stakeholders and the environment, whereas ethics are principles and values that guide an individual's behavior. A company can be socially responsible and unethical at the same time. However, practicing social responsibility may involve ethical behavior, such as treating employees fairly and offering environmentally-friendly products.

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