According to the Stakeholder Theory, what differentiates a successful business from a declining one is the ability to find the perfect balance of creating value for all of its stakeholders. This includes maximizing corporate profit while making executions that are in accordance with social responsibility to create positive externalities for our society as a whole.
United States’ largest drugstore chain, CVS Caremark, is one of the companies taking on the initiative to promote business ethics by ceasing its cigarette and tobacco sales as well as providing mini-clinical services to rebrand itself as a health care provider. In addition, it would be discordant for the company to continue its sales while providing patients with services such as high cholesterol, high blood pressure, and heart disease, all of which are linked to smoking.
Although CVS estimated this decision to result in a $2 billion loss in cigarette sales, it’s merely a small fraction in relative to its overall sales of $123 billion in 2012. The company also plans to make up for the profit by introducing a cigarette cessation program for Americans, which targets clients such as insurance plans companies.
Although many organizations are skeptical of the tangibility of the fine balance between ethics and profit, this is an example of how businesses can exercise social responsibility while continuing to generate revenue as a corporate.
Work Cited:
Freeman’s Stakeholder Theory. Dir. R. Edward Freeman. N.d.