Corporate Responsibility

The issues of social responsibility have received greater attention with the advent of intense globalization of business. Though there are disadvantages to adopting social responsibility, despite the numerous advantages of the practice. The problem that arises from using corporate social responsibility is that it promotes policies that are directly welfare reducing. Applying principles of corporate responsibility raises costs and prices. Whether it also reduces profits depends on market conditions. Corporate respon

sibility denies the managers ability to focus on the companies goals and to make decisions that will benefit the shareholder and the company. The key to a successful business if gaining profit. This commitment to maximize shareholder value can lie in jeopardy. Even though an organization might implement the process of social responsibility consumers may take the ultimate hit. The book brings out several key issues about the disadvantages of social responsibility. For example the cigarette industry was extremely effected by social responsibility. Cigarette prices in the last 5 years has dramatically increased due to government intervention caused by societies demands. There is too much focus on social responsibility. Social responsibility movements subvert the implicit promise of corporations to their shareholders, and require an expertise that corporations cannot be expected to have. The general public knew that the use of tobacco products may cause cancer but they needed an escape goat. Price increases can occur due to the modification of the product or service. We expect businesses to produce goods and services efficiently and cost effective, but that does not constitute social responsibility to consumers. Adopting social responsibility decreases profit due to the modification that a company might have to enhance to their product in order to satisfy the public. Cigarette companies had to re-market their products.