Business to Business Connections

A New Approach in Business – Business to Business Connections

Profit maximization Traditionally profit maximization has been considered the objective of business. This viewpoint has the great advantages, from the standpoint of the ethics of decision making, of clarity and certainty. The businessman is never in doubt about what he is trying to accomplish. Price and output are set at the levels where marginal revenue equals marginal cost.

All decisions are made on the basis of their impact on profits. The businessman need not consider any values or goals that cannot be expressed in money terms and which do not affect the profit position of the enterprise.

Therefore, the businessman can operate on a completely rational and objective basis. He need not take into account subjective and psychological phenomena in making decisions. The doctrine of socially responsible management complicates the decision-making process. If management compared quotes and became responsible to several groups in society, this means that the enterprise will have multiple objectives which reflect the goals, values, and ends of these groups.

Sustainable Businesses – There is a lot of good work done by companies to promote effective environmental action across a range of sectors, professions and issues – yet much of this action is only known to the companies involved. Green energy systems are supported by the government due to the positive environmental impact that comes from the systems being installed. Solar panel suppliers and installers are working with commercial industries all over the UK to bring down their carbon footprint. This is one of the many examples of a business 2 business connection.

Clearly there will be conflicts among these goals (e.g., customers desire lower prices, employees want higher wages, and stockholders want greater dividends). Such conflicts complicate the decision-making process because now management is faced with several alternative means-ends hierarchies, depending upon which objective is considered most urgent, instead of a single means-ends hierarchy, as in the profit-maximization case. Therefore, the ethical component of decision making is tremendously enlarged in scope. When profit is the objective of decision making, management has a clear picture of ends; and it is factually oriented because its major problem is to select the best means to the end of profit maximization. But when social responsibility is the objective of decision making, management must determine the best combination of ends as well as the best means to those ends.

It must take into account a wide range of value phenomena in deciding on ends, phenomena which are inherently highly subjective and psychological in nature.

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