British Petroleum Company, free market, Sustainable Management Futures
The free market theory postulates that there should be numerous participants within the same market engaged in the buying and selling of numerous and varied products. All such producers have the opportunity to take part in production activities and, therefore, share the profits present in legitimate business ventures and the consumers are deemed to have full information about prevailing market conditions. Furthermore, it argues that the ultimate gain is to consumers who enjoy the benefits of increased product diversity as well as competitive and affordable pricing on the same; in that the prevailing prices are a consequence of a push and pull forces of demand versus supply respectively. These ideal conditions of the free market form the basis and support for an economic practice that has become synonymous modern day trade under the banner of capitalism.
For perfectly competitive markets, the ideal economics of a free market exist. This was the prevailing economic theory of the period of 1960-80. However, the current trends in economics suggest that big markets hardly operate under perfect competitive conditions since primarily; households are conscious about the markets; producers curve out their market shares therein effectively seeking profit and shutting out other competitors. Most markets in both the UK and the US are not free markets but oligopolies where a few firms control a large portion of the market (Hoetzlein).
[...] So then, can it be argued that the collapse of free market theory was purposely orchestrated by the few economic moguls of the world? Or that the passing of time in the absence of a concomitant change in conditions of the market both in regard to capitalism and regulation naturally prophesized doom for the developed economies? If this be the case, does it therefore offer a legitimate case for government to be engaged in the regulation of commerce whether it is in the form of local, regional or international bodies? [...]
[...] He gives an example of capitalism reward for organizations that are accepted by the society as those which obey environmental laws. Furthermore, he identified that although most consumers are neither keen on environmental conservation nor willing to pay extra for the purchase of environmentally-friendly goods, the same consumers will easily shun down organizations that do not uphold environmental laws. Therefore ethics would direct the firm's to consider-in the absence of obligatory powers-formation of best policies and implementation of best practice. [...]
[...] The firm exists solely to make and realize profits for its stakeholders. In this view, corporate social responsibility would include all efforts engineered towards exploiting stakeholders and their resources in a bid to ensure profitability for the firm and as such, for the stakeholders too. However, since, under the system of free markets, the underlying agent for choice (which is at the crux of capitalism as an ideology) is the entering into of contractual agreements, and then it would imply that under Milton Friedman's model, corporate social responsibilities would regard undertakings to maximize the returns to the stakeholders under the confines of the law. [...]
[...] Praeger. Martins, E.C. & Terblanche, F European Journal of Innovation Management. Building organisational culture that stimulates creativity and innovation, pp.64-74. McElhaney, K.A Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand. Berrett-Koehler Publishers. [...]
[...] This relationship unto the future is very critical in light of the fact that oil business is typically a venture for life i.e. oil and natural gas extraction is a long-term operation that may stretch over several decades. Reference Baum, R.J., Bowie, N.E. & Johnson, D.G Conflict of Interest. Business & Professional Ethics Journal, pp.13-56. Kanungo, R.N. & Mendonca, M Ethical Dimensions of Leadership. Sage Publications. Karake-Shalhoub, Z Organizational Downsizing, Discrimination, and Corporate Social Responsibility. [...]
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