Monthly Archives: September 2014

“Tax Inversions“ are a popular strategy for American companies to save money by moving their tax domiciles abroad.General Electric, for example, recently sells its entire appliance division to a foreign company, Electrolux of Sweden, for $3.3 billion. (Sommer, 2014) By doing this, General Electric not only promotes its products to the other countries in the world but also automatically increases its profit with paying less tax.

In the name of promotion and development, General Electric seemingly benefits itself without violating law and rules. But if more and more companies in the United States utilize such strategy to reduce the cost, the government tax revenue in the domestic will decrease. Thus in some degree, “Tax inversions” violate interest of the whole country. Business as a whole, connects each group of stakeholders and requires each group to be responsible. Law is not the only standard to determine whether a company can implement a strategy. Besides law, there must be other standards such as a company’s social responsibility to evaluate the implementation of the strategy.

Picture from: https://www.ralstonreports.com/blog/poll-two-most-popular-things-nevada-are-margin-tax-and-gov-sunny

Reference: Sommer, J.(2014 September 13). Jeers and Cheers Over Tax Inversions. Retrieved from http://www.nytimes.com/2014/09/14/your-money/jeers-and-cheers-over-tax-inversions.html?ref=international

Friedman has proposed that the responsibility of business is to maximize the profit without violating law. But is it easy to strictly obey the law? And is law the only rule for corporation to obey？Sometimes when corporates or individuals strive to make profits as much as possible, though they may violate the law but violate certain rules called “BUSINESS ETHICS”.

A protest at a Gap store on Thursday in Chicago, in response to the disaster in Bangladesh.

After a building including several clothing factories collapsed in Bangladesh, individuals have concerned about the safety of such clothing factories. Some clothing companies ‘reluctance on signing for safety standard of factories provokes protest. As Freeman mentions, the interest of suppliers, consumers, employers and employees cannot be isolated. In this case, while cutting cost and increasing profit, these companies are also supposed to ensure the benefit of their employees since the employees play a important role to create value for the company. On the other hand, if these clothing companies truly protected rights of employees before this collapse event, they would not be blamed by the public. The public opinions actually damage the companies’ image and established reputation. And those brands may lose customers’ trust.

Stakeholders in business have interactional effect on each other. Hence, being responsible for each of the groups is the equally important as making profits because all of these groups affect the profit that companies can make. What make a company truly successful and profitable is the company’s ethical spirit.

Resource and Picture from http://www.nytimes.com/2013/05/11/business/global/clothing-retailers-pressed-on-bangladesh-factory-safety.html?pagewanted=all&_r=1&

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