BA 242 Exam
One of Galbraith’s most famous concepts is the Dependence Effect, which says that advertising persuades people that they require items that they do not actually require. If a person’s requests are urgent, Galbraith asserts that they must be unique to the individual in question. If they have to be made up for him, they can’t be considered urgent. If production is the cause of the desires, it cannot be justified as a means of gratifying those desires. Because of the institutions of contemporary advertising and salesmanship, there is an even more direct link between supply and demand.” With this approach, Galbraith attempts to undermine the underpinnings of microeconomics in terms of human preferences, which he believes is a mistake. According to Hayek: The cultural origins of practically all civilized life’s necessities must not be confused with the reality that certain desires are driven only by the perceived social status that an object’s consumption is expected to provide. According to Professor Galbraith, Lord Keynes seems to consider the latter sort of Veblenesque conspicuous consumption as the only viable alternative “to those needs that are absolute in the sense that we feel them independently of the position of our fellow human beings.” These two Keynesian groups describe only the most extreme types of desires, but exclude the vast majority of goods that are necessary for civilized living if the second statement is interpreted to exclude any desire for commodities that is felt solely because they are known to be created, as stated in the second statement. Hayek is right on this matter.
According to Freeman’s theory, CEOs should create value for several stakeholders. Unlike the one group Friedman mentions: investors. This narrowing of relevant groups is one of Friedman’s weaknesses, as actual business relationships do not reflect them. Even the most successful company cannot exist in isolation. It needs capital, customers to buy its goods/services, employees to serve them, suppliers to supply the goods/services, and a supportive community to expand. The business cannot flourish without these categories. Naturally, the groups may clash. A merchant may demand such low prices from suppliers that they are unable to earn a profit without outsourcing manufacturing or providing inferior goods. While certain stores (Walmart, for example) can accomplish this, suppliers dislike having to work with the retailer and would gladly support any other store if they could gain from it. So long as the store retains market dominance, this is not a healthy environment. A compromise that suited everyone’s wishes would benefit all parties. One may argue that the Stakeholder Theory depicts the actual web of interactions that occurs in any organization’s activity. Obviously, the Stakeholder Theory requires more accountability than the Shareholder Theory. Stakeholder Theory-based management must incorporate the wishes of many people. Additional from Shareholders, there are other groupings. Friedman made several strong arguments for holding companies exclusively accountable for increasing profits for shareholders. The next section will analyze several reasons why we should embrace the Stakeholder Theory’s new obligations.
Ethical issues include the knowledge of the auditing firm of a discrepancy and failure to act. The bosses’ decision to close the matter in order to retain the client was a serious ethical dilemma. The ethical issue affected the auditing firm, the bosses, the employee, the firm under issues, the loan provider, the legal authority, and the government as an interested stakeholder. Because of the revelation of a fraudulent scheme, the reputations of several financial market participants are tarnished, undermining investor confidence in the market and penalizing all enterprises involved. Financial market regulators, auditors, financial analysts, boards of directors, and credit rating agencies are all held responsible for investors’ lack of confidence in their ability to predict and respond to market changes. Additionally, non-financial losses such as the socio-economic costs associated with job losses are added to the financial losses sustained by investors, and this might potentially result in the collapse of the entire financial organization. Businesses may face fines of up to millions of dollars if financial and accounting information that should have been disclosed by corporate officials is not provided or is false. If the company’s disclosure systems had adhered to industry norms and offered the transparency required by law, fraudulent acts such as embezzlement and manipulation would not have been conceivable. In this dilemma, the multiple ethical principle perspective of utilitarianism looks at favoring short-term benefits, even though the long-term costs are greater. The deontological ethics advise that people have a duty to respect other people’s rights and treat them accordingly. What is primarily under examination in virtue ethics is “what makes a decent person,” or, for the sake of this debate, “what makes a competent public relations practitioner.” It is recommended that the matter be reported and the issue be handled internally including the removal of the current boss in office.
