You serve as the assistant to the very recently appointed CEO of a prominent start-up that is beginning to grow rapidly. The new CEO, Tara Richmond, is a former general who gained visibility in the military for her outstanding leadership qualities. Since her arrival, the Board of Directors has had spirited debates on several proposals that would increase corporate profits but would work to the disadvantage of some members of the public as well as other stakeholders. Some members of the board are arguing that the only obligation the company has is to make profits for the stockholders. Other members of the board are arguing that the company has an obligation to the community and to stakeholders other than just the stockholders. 
Your boss is baffled by the debate. “When I was in the military, my duties to others were clearly laid out. Here, I am unsure to whom the company owes a duty.” She turns to you for advice, requesting that you draft a memo that explains what the company’s ethical obligations are in situations like these. She asks you to start with Milton Friedman’s opinion piece in 1970, arguing that a company’s only ethical responsibility is to make profits. That can be found at http://ezproxy.umgc.edu/login?url=https://www-proquest-com.ezproxy.umgc.edu/newspapers/social-responsibility-business-is-increase/docview/2441921739/se-2?accountid=14580.
She also asks you to review a much more recent memo from the Business Roundtable that takes a more expansive view of the responsibilities of a company. The Business Roundtable consists of CEOs of Fortune 500 companies, many of whom are familiar names to her. That memo can be found at https://system.businessroundtable.org/app/uploads/sites/5/2021/02/BRT-Statement-on-the-Purpose-of-a-Corporation-Feburary-2021-compressed.pdf.
You should do additional research on arguments for and against Friedman’s proposition. Using your classroom materials as well as external sources, respond to the following prompts: 
1.    Explain Milton Friedman’s arguments supporting that a company’s only obligation is to make money.
2.    Explain the arguments contrary to Friedman’s position including where the Business Roundtable stands as well as other arguments you find in your research.
3.    Using one of the ethical issues that you posted in classroom discussions, illustrate for the CEO, how that issue would be resolved using Friedman’s perspective and how it would be resolved using the perspective of the Business Roundtable.
4.    Which of these positions do you find most compelling and why?
Your memo should begin with an introduction and end with a conclusion where you make recommendations to the CEO.

ANSWER PREVIEW

Memorandum

To: Tara Richmond, CEO From: [Your Name], Assistant Subject: Company’s Ethical Obligations in Situations of Conflicting Interests

Introduction: The recent debates among the Board of Directors regarding the company’s ethical obligations in situations that increase corporate profits but harm some members of the public and stakeholders have prompted this memo. In this memo, we will examine the arguments of Milton Friedman, who argued that a company’s only ethical responsibility is to make profits, and the Business Roundtable, which takes a more expansive view of the responsibilities of a company.

Milton Friedman’s Arguments: Milton Friedman, a renowned economist, wrote an opinion piece in 1970 that argued that a company’s only ethical responsibility is to make profits. He argued that corporations are primarily accountable to their stockholders, who own the company, and that any other obligations should come only after the obligations to the stockholders have been satisfied. He maintained that corporations should not waste resources on charitable acts, as these actions do not lead to the best outcome for the stockholders.

Arguments Contrary to Friedman’s Position: There are several arguments against Friedman’s position. The Business Roundtable, which consists of CEOs of Fortune 500 companies, has taken a more expansive view of the responsibilities of a company. The Business Roundtable argues that corporations should also consider the interests of their customers, employees, communities, and suppliers. Additionally, there are arguments that corporations have an ethical obligation to consider the long-term impact of their actions on society and the environment.

Resolution of Ethical Issues Using Different Perspectives: Consider the ethical issue of environmental degradation caused by a corporation’s operations. Using Friedman’s perspective, the corporation’s only obligation is to make profits for its stockholders. The corporation would continue its operations regardless of the impact on the environment. In contrast, using the perspective of the Business Roundtable, the corporation would have an ethical obligation to consider the impact of its operations on the environment and take actions to mitigate any negative impacts.

Conclusion and Recommendations: Based on the arguments and resolution of ethical issues, we can conclude that there is a wide range of opinions regarding the ethical obligations of corporations. Ultimately, it is up to the CEO and the Board of Directors to determine what is in the best interests of the company and its stakeholders. In this case, I recommend that the CEO and the Board of Directors consider the long-term impact of their actions on all stakeholders, including the community and the environment, while also maximizing profits for the stockholders. This approach is more likely to lead to sustainable success for the company.

Thank you for your time and consideration. If you have any questions or concerns, please do not hesitate to reach out.

Best regards, [Your Name]

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