Question

2-3 paragraph response. What is an example of a company doing good by doing well—that is, making profits—and for that reason improving the general welfare? How can the example be converted into an argument against the theory of the corporation as having social responsibilities?

Answer 1

company that is making good by doing well is that of TOMS.

The reason for this is that TOMS has a buy a pair give a pair initiative. This means that every time a consumer buys a pair of shoes, the company will donate a pair to those in needs. This helps promote to the general welfare of society, thus giving that a positive image for social responsibility.

The argument that can be made against this, is that the firm is doubling their cost of goods sold, and thus impacting profits to the firm, and not maximizing welfare for the shareholders. While this may be true that this results in a higher cost of goods, the overall impact is that this program helps increase the firms image, enables one to connect with consumers, builds strong customer loyalty, and encourages repeat and additional purchase, thus adding to the overall profits for the firm.

The concept here is that when a company acts in a socially responsible manner, this may require the company to take additional costs on, but the overall notion, is that it builds long term value for the firm through sustainability and customer loyalty.