Contemporary Business Environment

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Introduction

In today’s modern business environment, it has become difficult but integral for businesses to realise their social responsibility. Social responsibility of the business basically means that businesses need to balance their profit-making activities for the betterment of society. According to Friedman (1962), businesses are required to use its resources to get engaged in activities that enhance the profits (p. 133).  Free competition without deception or frauds remains the basic rule of modern day business. It is commonly witnessed in the business environment that organisations deceive or get engaged in unethical working practices without even caring for their social responsibility towards the society (Carroll & Shabana, 2010, p. 85).

Child labour and use of animal fur in clothing industry are few of the most important examples in this regard. The current paper intends to critically discuss the merits of the statement given by Friedman in the contemporary business environment for identifying the potential obligations a firm have beyond earning revenues. The essay will respectively discuss the merits of social responsibility for businesses in a critical manner and the other obligations a business have beyond profits. Various examples will be used throughout the essay for clear illustration of the topic.

Merits of Freidman’s Statement in the Contemporary Business Environment

As per the statement of Freidman (1962), businesses must encourage free competition without any deception or fraud and use all its resources to get engaged in activities that increase the profits. Critically analysing the merits of this statement in the contemporary business environment, it can be easily claimed that the statement does not hold true in the modern business. Despite open knowledge of many businesses being involved in unethical practices like child labour and use of animal fur, people remain interested in buying those products. Thus, the constantly increasing profits of many businesses not being responsible enough to use its resources and engage in the activities designed to increase its profits within the rules of the game (Cavusgil, Knight & Riesenberger, 2013, p. 5).

To start with, a good example is evident in the case of Canada goose. Canada goose is a Canadian outdoor clothing company which uses real coyote fur in its products. There are criticisms that the company actually celebrates the trapping and killing of wildlife. According to Collins (2014), there are many videos and photos available online depicting how Canada goose has been trapping and slaughtering the animals to get its fur (p. 1). In 2010, People for the Ethical Treatment of Animals (PETA) has criticised Canadian Prime Minister Justin Trudeau and his family for wearing the products of Canada goose. According to PETA (2017), at the same time, PETA has purchased the company’s shares to be able to ask them to abandon the cruelty towards animal (p. 1). Apparently, Canada goose is not involved in any fraud or deception. It openly accepts its usage of fur in its products by claiming that the fur helps in keeping the customers warm.

Therefore, it can be claimed that the company is not deceiving the customers by rejecting the blames of using fur in its products, but it is rather using its resources to stay in the game for as long as possible (Johnson, Whittington & Scholes, 2011). At the same time, Canada goose is involved in many social responsibility activities like opening up resource centres for helping the community. The example of Canada goose illustrates how businesses cover their unethical practices by promoting their other social responsibility activities. The contemporary business environment makes it important for businesses to promote their social responsibility by investing some portion of its resources back towards the betterment of the society (Morrison, 2011). Another good example in this regard is a famous fashion retail brand named Zara.

Zara is known for its fashion clothing products across the world. According to Osborne (2013), high street fashion store Zara is accused of using slave and child labour in its different factories across Argentina, Brazil and other countries (p. 1). There are multiple reports published that depict that the suppliers of Zara make immigrant workers live in degrading conditions. In 2006, Zara was criticised to use Portuguese children as young as 11 for producing its shoes and paying them as low as £13.70 (Keelay, 2006, p. 1). At the same time, Zara has developed its Code of Conduct which requires that the wages must be equitable to the minimum legal or collective bargaining agreements. Despite all the criticism and proves against the use of child labour by Zara, the company is earning revenues days in and days out.

Nike has also known for its sweatshop’s scandal for producing footwear and clothing items since 1970. Although the company has worked hard to clear its image, the sweatshop blames are started to become prominent yet again. According to Bain (2017), in 2017, Nike contract factory in Vietnam is facing several accusations of verbal abuse, wage theft, and unbearable working conditions (p. 1). Thus, all the mentioned examples of contemporary business environment clearly reflect the merits of the statement of Friedman.

Potential Obligations a Firm may have Beyond Profit

The theory of social responsibility elaborates that there are many potential obligations a firm have beyond earning profits (Carroll, 1991, p. 39). To start with, the contemporary business environment does not put any limit or restriction on the percentage of profits the businesses can make. As a result, businesses easily earn 200% to 300% profits. In such a situation where the profits are not constrained, firms are obligated to pay back to the society. There are many ways in which the business can pay back to the society. For instance, the business can sponsor school projects for the unprivileged children, or it can even invest all the money to abandon its unethical production activities. Within the context of corporate social responsibility theory, firms are obligated to being ethical and adhering to the laws (Brusseau, 2011, p. 1). A business firm is obligated to adhere to the legal responsibility. The modern-day businesses often try to find solutions to get away with the rules and regulations.

For instance, with the passage of time, the biggest responsibility of a business is to protect the environment. Since the majority of the production concerns are criticised to harm the environmental benefits, it is necessary for the businesses like Canada goose to realise the importance of wildlife and adhere to the regulations. The organisations like PETA must become more proactive to implement the legal responsibility of businesses. Further, businesses also have an ethical responsibility beyond making profits (Hill, 2014, p. 7).Companies like Zara and Nike are earning heaps of revenue every single day. Also, they are very well aware of the criticisms and blames of child labour, slave labour, and sweatshop factories involved in the production of its labelled products. Thus, they are obligated to stop contracting with such suppliers for maximising the value of everyone’s welfare. In simple words, the contemporary businesses can earn profits while adhering to all their obligations while earning good amounts of profits.

Conclusion

The contemporary business environment has urged the organisations to become socially responsible. According to Friedman (1962), the businesses need to use its resources for getting engaged in the activities to increase its profits while staying within the rules of the game of free competition without deception and fraud. The purpose of this paper was to critically discuss the merits of this statement in the light of contemporary business environment. Also, the paper discussed potential obligations a firm have beyond earning a profit. Throughout the discussion, it became evident that famous companies like Canada goose, Nike, Zara and many others are earning massive profits despite the knowledge of the customers that these companies are not acting socially responsible. What does this imply? Do the modern customers are indifferent towards the child labour, slave labour, sweatshops and unethical killing of wildlife? Or these famous businesses are able to get away with these business practices by investing their profits in other social responsibility activities sponsoring schools and other activities?

The answer to all these questions only reflects the fact that the contemporary business environment has become extremely influential, globalised, and powerful that activist organisations like PETA and others are not capable to adhere with their duties fully. Customers need good quality products at affordable prices and they ignore the rest of the criticisms of the businesses. Further, the CSR theory makes firms obligated to adhere to all the economic, legal, ethical and philanthropic responsibilities. To conclude, it can be easily suggested that the businesses need to think beyond their own profits for the betterment of the society. Businesses must invest a good portion of its profits back towards the society (Campbell, 2007, p. 946). Last but not the least; the customers also have a responsibility beyond using the products, which is to pressurise the companies to stay ethical and socially responsible in all its activities.

References

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• Osborne, L. 2013. High-street fashion store Zara accused of using slave labour at factories in Argentina data retrieved from http://www.dailymail.co.uk/news/article-2303358/High-street-fashion-store-Zara-investigation-use-slave-labour-factories-Argentina.html
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