Recently appointed CEO of a prominent start-up that is beginning to grow rapidly.
You serve as the assistant to the very recently appointed CEO of a prominent start-up that is beginning to grow rapidly. The new CEO, Tara Richmond, is a former general who gained visibility in the military for her outstanding leadership qualities. Since her arrival, the Board of Directors has had spirited debates on several proposals that would increase corporate profits but would work to the disadvantage of some members of the public as well as other stakeholders. Some members of the board are arguing that the only obligation the company has is to make profits for the stockholders. Other members of the board are arguing that the company has an obligation to the community and to stakeholders other than just the stockholders.
Your boss is baffled by the debate. “When I was in the military, my duties to others were clearly laid out. Here, I am unsure to whom the company owes a duty.” She turns to you for advice, requesting that you draft a memo that explains what the company’s ethical obligations are in situations like these. She asks you to start with Milton Friedman’s opinion piece in 1970, arguing that a company’s only ethical responsibility is to make profits. That can be found at http://ezproxy.umgc.edu/login?url=https://www-proquest-com.ezproxy.umgc.edu/newspapers/social-responsibility-business-is-increase/docview/2441921739/se-2?accountid=14580.
She also asks you to review a much more recent memo from the Business Roundtable that takes a more expansive view of the responsibilities of a company. The Business Roundtable consists of CEOs of Fortune 500 companies, many of whom are familiar names to her. That memo can be found at https://system.businessroundtable.org/app/uploads/sites/5/2021/02/BRT-Statement-on-the-Purpose-of-a-Corporation-Feburary-2021-compressed.pdf.
You should do additional research on arguments for and against Friedman’s proposition. Using your classroom materials as well as external sources, respond to the following prompts:
1. Explain Milton Friedman’s arguments supporting that a company’s only obligation is to make money.
2. Explain the arguments contrary to Friedman’s position including where the Business Roundtable stands as well as other arguments you find in your research.
3. Using one of the ethical issues that you posted in classroom discussions, illustrate for the CEO, how that issue would be resolved using Friedman’s perspective and how it would be resolved using the perspective of the Business Roundtable.
4. Which of these positions do you find most compelling and why?
Your memo should begin with an introduction and end with a conclusion where you make recommendations to the CEO.