According to Milton Friedman, “The social responsibility of firms” is to use its resources and increase its profits as long as it stays within the rules of the game. To some extent i would agree with this statement but businesses cannot just focus on this one specific angle because what makes a business depends on other aspects such as different stakeholders. The effects of the decisions made by firms upon stakeholders will play a determining role in the future state of the firm. Therefore, an ethical decision will comprise of one that considers these aspects, although, often will be ignored by many profit orientated firms.
CVS Caremark, the largest drugstore chain, decided to quit selling Tobacco. In this instance, rather than focusing about increasing profits, it has alternatively become a health care provider rather than a retail business. Considering various stakeholders, manufacturing industries would be rather disappointed, however, their sales will just be diverted to other wanting shops that will buy them. Addicted Consumers may be disappointed but this is paid off by the cessation programs that will help reduce the need of Tobacco and also reduce the individual’s medical costs. Investors benefiting from this decision as it has helped to transform the firm into a potential health care provider which may lasts in the future. Lastly, the firm itself although reduces its profits, has potentially tried to earn revenues in a more ethical way through such smoking cessation programmes.
As such different stakeholders were considered when making such a decision that they are all benefiting in some what way. A decision that takes the interest of different stakeholders into account and not just the firm’s is what will lead towards success as mentioned by Freeman through the “Stakeholder Theory”. Thus, it can be seen that the firm has indeed made an ethical decision!