I am currently practicing for my GRE and wrote this Issue Essay today:
Topic: Analysis of an Issue
The desire of corporations to maximize profits creates conflict with the general welfare of the nation at large.
Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations or reading.
Nowadays it is commonly seen that companies get involved in corporate social responsibility and thereby spend resources and money on issues which benefit
the entire society and not only the company itself. Taking the claim above and relating the statement to corporate social responsibility, might bring up the following question: Why do corporations spend money on corporate social responsibility when their primary goal is profit maximizing.
To answer this question I would argue that being involved in corporate social responsibility programs positively influences the performance of the firm, as this was proven by research. This is the case, because the company improves its reputation and image but also a company, which engages in corporate social responsibility, has a better working climate and more motivated workers, due to the community receiving benefits from the firm's existence. This is an example of a firm maximizing
its profits while contributing to the welfare of the nation.
Unfortunately this is only a very modern approach and might be the ideal approach, but in many countries this is currently no taking place. Especially in developing countries it can be observed that companies operating in the country focus on cost cutting, cheap operation and profit maximization. By pursuing these goals they
ignore their responsibility as a company to contribute to the welfare of society. Focusing on simple profit maximization the country's resources are often exploited,
the workforce is not treated fair and especially environmental concerns are not considered. In many undeveloped countries companies in the production industry extract an incredible high pollution and are not held responsible for this. But it is not only taking place in developing countries, that a corporation is solely tracing its own goals.
A well-known European low cost flight company is a good example for a European company that is explicitly maximizing its profit without considering the side effects of this. While mainly cutting labor costs, many personals and pilots are forced to accept constricting contracts and many workers are fearing to loose their job. But even if a company is only reaching for its goal of profit maximization there is still some contribution to societal welfare, which cannot be denied. Every company operating in a country is obliged to pay taxes and by maximizing profits also tax payments are increased. Furthermore a company, which issued shares at the stock market, contributes to societal welfare if it maximizes profit, as the share price is likely to increase, which benefits its investors, who might belong to the society. It can be discussed if these are direct benefits to the society but I would argue that this cannot be compared with corporate social responsibility. Unfortunately corporate social responsibility is currently mainly pursued by conglomerates but also often faked to create a beneficial image.
But there are also many companies, which are reasonably involved in corporate social responsibility and contribute to the general welfare of a nation. Therefore I conclude that it is not necessary that the corporation's objective to maximize profits conflicts with the welfare of the entire nation, but unfortunately it is the case in many countries that companies exploit the resources of the countries they are operating in and do not fulfill their corporate social responsibility.
I am looking forward to reading your comments and feel free to send me your essays so that I can comment on them.
Thank you very much in advance-
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