Assignment On Business Ethics

Prepared For: Professor Dr AKM Salahuddin East West University

Prepared By: Md Yeahyea Kabir 2012-1-95-065

Course Code: MBA 513

Date of Submission: March 24, 2012

Question: How can profit motive be reconciled with the desire to be of service to society? Explain

Profit Motive: The profit motive or maximization of an organization is a paradigm in economics that refers to individuals or societies gaining the maximum amount out of the resources they have available to them. Profit motive is the vital force to sustain the existence of the establishment. Margin of profit is the description of the specific margin to make profit. It can be lower profit margin and high profit margin. Lower profit margin means the organization is making a low profit. Higher profit margin means the organization is making a high profit margin after including all costs. Market Economy Business Even though the market economy has proved to be an essential condition for meeting the needs of the most people, valuable lessons have been learned along the way, often at great social cost. Societies and individual business enterprises have learned that it matters how profits are made, how wealth is distributed, and whether business can be sustained. Business enterprises today are expected to meet standards of responsible business conduct that go beyond what had been expected traditionally. Although people more often than not still speak of business in terms of products, jobs, and profits, it is understood and accepted across the globe that a business enterprise remains a member of its community. The pursuit of profits and economic progress is not a license to ignore community norms, values, and standards of respect, integrity, and quality. Improved business performance, profits, and economic progress come to those who effectively and efficiently foster and meet the reasonable expectations of their primary stakeholderscustomers, employees, suppliers, investors, and the environment, as well as the owners and managers themselves. Success for any business is ultimately measured in profits and losses, and the socially responsible business generates the capital and revenues required to operate and stay in business over the long time. The socially responsible business must generate enough revenue to cover the real cost of capital, the risks and uncertainties of future economic activity, and the needs of its workers and pensioners. But from that revenue giving service to society made the organization successful. PRACTICE NOTE Yes, profit is a cornerstone of what we doit is a measure of our contribution and a means of self-financed growthbut it has never been the point in and of itself. The point is, in fact, to win, and winning is judged in the eyes of the customer and by doing something you can be proud of.

There is symmetry of logic in this. If we provide real satisfaction to real customerswe will be profitable.. David Packard, Founder Hewlett-Packard. An Ethical issue: In Bangladesh everybody knows about the syndicate business. The businessmen start to increase the stock of some goods as they know there will be high demand for these goods. As they forecast high demand and increase the stock likewise, the gap between demand and supply is not big. Sometimes supply is even seen to surpass demand. Yet prices increase. There is something else that overrides the interaction of demand and supply. On the other hand, the income of the general masses does not increase sharply by which they can fuel their demand for some goods and consequently prices increase as the demand exceeds supply. That is, income variable does not have an impact on price-hike behavior of the commodity. The Business establishment or businessman has no right to take disproportionately high prices. This situation exists in the developing countries only. Social responsibilities are the only way to solve the problems. Each and every businessman has some social responsibilities and they are accountable to the society. If they can implement that in business then the reconciliation process will take place between profit motive and service to the society. Taking Lower profit margin will be the key regarding the situation. Lower profit margin is the key of success of an organization for the long term. Examples of a successful low profit margin organization: On May 9, 1950 Sam Walton opened Walton's 5&10 store in Bentonville, Arkansas. His standard for achieving success relied on him making sale prices lower than his competitors and reducing the store's profit margin. In the mid 60's Walton's assistant Bob Boggle had tagged the 5 & 10 store as Walmart permanently. By 1980 Walmart was a billion dollar company with stores operating across 28 states. Now Walmart is the biggest example of how profit motive reconciled with the desire to be of service to society. Social Responsibilities: For a business to take responsibility for its actions, that business must be fully accountable. Social accounting, a concept describing the communication of social and environmental effects of a

company's economic actions to particular interest groups within society and to society at large. Serving the society is another way to reconcile profit motive with the desire to be of service to society. Examples Based on Bangladesh point of view DBBL is a responsible corporate body has been playing a pioneering role in implementing social and philanthropic programs to help disadvantaged people of the country. Education, healthcare, human resource development, conservation of nature, creation of social awareness, rehabilitation of distressed people and such other programs are some of the important areas where the bank carries out its social and philanthropic activities. DBBL has been playing a pioneering role in implementing social and philanthropic programs to help disadvantaged people of the country. Education, healthcare, human resource development, conservation of nature, creation of social awareness, rehabilitation of distressed people and such other programs to mitigate human sufferings are some of the important areas where the bank carries out its social and philanthropic activities. Dutch-Bangla Bank Foundation, established in June 2001, carries out humanitarian activities like rehabilitation of the destitute and neglected section of the society. DBBL provides 5 percent of its gross profit to the foundation every year. DBBL is the least costly bank in our country. Even though DBBL is earning a lot profit, from their profit 5 percent is not very large portion, but still this 5% is the main catalyst which turns to be a success factor for the Bank.

Conclusion:

Generating high profit is not the only way to be a successful business organization. Business should be for the society, for the people. If any company tries to generate excessive high profit then that organization will loose their goodwill soon. If the organizations loose their earned goodwill then that will be self destructive for them. As an example Bangladeshs first mobile operator Citycell have earned a lot from their first few years. Huge profit made during their successful monopoly operation. Now the situation reverses. Finally its very important to realize the accountability of business and the businessman. So the companies should reconcile with the desire to be of service to society. Service should be in form of socially responsible and lower profit motive.