Saturday, 8 October 2016

Is Profit the Purpose of Business?

by Nicholas Lemieux

When an entrepreneur starts a business, one of the major goals is focusing on generating and making a reasonable profit. Indeed, without a profit, the business will soon enough fail. However, there are some people who claim that profit is not the only purpose of business and that businesses should also focus on making a positive contribution to society and put lots of effort into their work. For decades this has been a constant debate amongst people and this essay will discuss whether or not businesses should spend most of their time making money.

There are those who say that making money is a business’s top priority. Producing an income is a major factor of a business’s success and over time there have been several companies whose main goal is to make as much money as possible, even if it means going to certain measures. There have been numerous companies who capitalise on any opportunity they come across just to make some cash. An animation studio, called Video Bringuedo has used this method by producing low-budget, direct-to-video, knock-off mockbuster animated films. Their films notably share similar properties to films made by other animation studios like Disney and Dreamworks. For example, one of their films “Ratatoing” had a plot quite similar to Pixar’s film “Ratatouille” and was clearly intended to cash in on the film’s immense success and thereby capitalise on the opportunity. While some of these films did end up resulting in the studio getting several lawsuits from the other animation studios, mainly under trademark infringement, these films, which are fairly cheap for people to buy, have succedded in generating a profit for Video Bringuedo at the expense of the genuine hard working staff at Disney and Dreamworks for example; to this day they still continue creating animated films. Another example is the British retailing group Sports Direct which has gained millions of pounds from customers around Britain, whilst around 90% of the workers there are employed on zero-hour contracts, meaning that there is no obligation for employers to offer work. Additionally, the company   fines staff heavily for late clocking on, does not award overtime for late clocking off and regularly forces staff wait unpaid for a security check at the end of shifts. Despite all of these unethical practices, Sports Direct continues to make a grand profit, which measures up to £241.4 million. One last example is agencies that offer care for the elderly. More than 700,000 people above the age of 65 rely on home help for certain activities, like washing, dressing and eating. However, while vulnerable old people pay dearly for these services, there is much evidence that confirms that these agencies tend to use rather unethical methods to make profits. Most of the carers for these agencies are employed on a zero-hour contract, which causes some of them to be poorly trained and not have enough time to carry out their duties. In turn, this has devastating consequences for the elderly, whom these agencies are supposed to be looking after, making them suffer from very poor home care. As a personal example, an elderly neighbour of mine, Dory, relies on these agencies to live properly. As a result of the poor care from these agencies, she is in hospital right now. And yet despite all of this, agencies like this continue to rake in huge amounts of money, making their owners rich at the expense of the elderly and infirm, and the staff who care for them.

However, there are those who believe instead, that profit is not in fact the only purpose of business and that businesses should otherwise work to make a contribution to society and therefore they put lots of effort into their work to earn a living; for example companies that trade in Fair Trade products. Fair Trade is essentially where fair prices are paid to the producer. There are numerous companies that sell and support Fair Trade products and by doing so they are encouraging fair prices, decent working conditions and local sustainability which makes a massive contribution to society. Another example of businesses that focus more on improving society is Christian Aid, a relief and development agency from numerous British and Irish churches. Christian Aid raises income from a wide number of sources, such as institutional grants or simple regular gifts and, instead of using the money generated for their own benefit, they use it to support things like sustainable development or civil society and to stop poverty. Through numerous fundraising activities, including an online shop, Christian Aid has amassed large amount of money, £195.4 million at one point, and uses it to make the world a better place. Additionally, there have been numerous companies who, after focusing mainly on amassing a profit, have ended up bankrupt. For example, a power company in America called Enron focused mainly on producing huge profits. In fact, Enron’s financial condition was mainly sustained through institutionalized, systematic and creatively planned accounting fraud. Soon enough, a major scandal occurred regarding the numerous crimes committed by Enron to maintain its income, which included bank fraud, money laundering, making false statements to banks and auditors and numerous other offences. Soon enough, this scandal led to the company becoming bankrupt in 2001, with numerous people involved with Enron arrested for the mass fraud and the company eventually becoming defunct in 2007. One other instance of a company focusing on gaining a profit with horrific consequences was what became known as the Bhopal disaster. An American firm called The Union Carbide Corporation had a division in India which included a mass number of power plants. This company was only interested in making money, and as a result did not care too much about safety measures. As a result, on the 3rd December 1983 the deadly gas methyl isocyanate was accidentally released from one of the corporation’s storage tanks and led to a major crisis in the city of Bhopal in India. There were at least 3787 deaths as a result, and at least 558, 125 injuries too, and as a result of the disaster, civil and criminal cases were filed against the corporation along with a heavy fine.

Overall, to conclude, I believe that producing a profit is not the only purpose of running a business. While there are several companies out there who have made millions of pounds purely from focusing on making money, such as Video Bringuedo or Sports Direct, there are numerous examples of other companies, such as Christian Aid or Fair trade, who do not focus all their efforts on simply making money but also try to make a contribution to society.  In addition, several companies who only focused on making a profit, such as Enron, have ended up bankrupt and defunct due to their unethical methods, further enforcing the notion that profit is not the purpose of business. In conclusion, profit ultimately should not the sole purpose of business, as making a positive contribution to society helps make the world a better place.

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