Why do some business firms pursue a triple-bottom-line outcome while others focus only on profit maximization? Please, use a real company example to illustrate your points. The triple bottom line outcome focuses on the concept where firms are environmentally conscious and socially responsible by achieving a balance between profits, avoiding damage to the environment, and achieving social benefits (Douglas, 2012). Traditionally, firms focused on profit maximization to achieve profits to pay out dividends and capital gains so shareholders can buy things. In a recent article, Nursing Homes are overbilling Medicare $1.5 billion a year for treatments patients don’t need or never receive. When nursing homes where for-profit, 30% of claims sampled were considered improper while non-profit nursing homes estimated only 12% (Waldman, 2012).
Jill Horwitz, a professor at the University of California stated that for-profit health care providers are more likely to pursue money in any way possible, even by pushing the legal envelope (Walkman, 2012). There are still for-profit companies who pursue a triple-bottom-line outcome. Campbell Soup Company has been environmentally conscious and socially responsible since 1953. The Campbell Soup Foundation has been supporting local communities where employees live and work financially. Campbell Soup’s headquarters is located in Camden, New Jersey where they donate approximately $1 million each year to impact the local residents in a positive manner (Campbell Soup Foundation). They focus on hunger relief, childhood obesity and youth-related programming. Not only does Campbell Soup invest in its local communities, they also partner is many non-profit organizations like the Boy & Girls Club and the United Way.
Customers can influence firms to pay more attention to the preservation of the natural environment by emphasizing how important the community and environment in which they live are. Many organizations are now trying to go green. They are making products that use fewer materials and are less harmful to the environment. If customers refuse to buy products from organization that do not value the environment, organizations will change to customer’s needs. Along with not buying products, customers should not invest with companies who do not value the environment and communities. “Economists incorporate the triple bottom line into their models of business decision making by assuming that many individuals will buy shares in companies that achieve the triple bottom line outcomes they want and will sell shares in companies that do not” (Douglas, 2012. Pg. 7).
Campbell soup foundation. (2012). Retrieved from http://www.campbellsoupcompany.com/Foundation.aspx Douglas, E. (2012). Managerial Economics (1st ed.). San Diego, CA: Bridgepoint Education.
This text is a Constellation™ course digital materials (CDM) title. Waldman, P. (2012, December 31). For-Profit Nursing Homes Lead in Overcharging While Care Suffers. Bloomberg. Retreived from http://www.bloomberg.com/news/2012-12-31/for-profit-nursing-homes-lead-in-overcharging-while-care-suffers.html 1. Firm Objectives
Why do some business firms pursue a triple-bottom-line outcome while others focus only on profit maximization? Please, use a real company example to illustrate your points.
In 300 words or more, please, provide your response to the above discussion question. Comment on how customers can influence firms to pay more attention to the preservation of the natural environment. Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.
2. Decision Making Under Uncertainty
To save on gasoline expenses, Edith and Mathew agreed to carpool together for traveling to and from work. Edith preferred to travel on I-20 highway as it was usually the fastest, taking 25 minutes in the absence of traffic delays. Mathew pointed out that traffic jams on the highway can lead to long delays making the trip 45 minutes. He preferred to travel along Shea Boulevard, which was longer (35 minutes), but rarely had traffic jams. Edith agreed that in case of traffic jams, Shea Boulevard was a reasonable alternative. Neither of them knows the state of the highway ahead of time. After driving to work on the I-20 highway for 1 month (20 workdays), they found the highway to be jammed 3 times. Uncertainty is when the potential outcomes are not predictable and/or the probabilities of these outcomes are not estimable ahead of time (Douglas, 2012). * I-20 = 25 minutes w/o delays (25 minutes * 365 days = 9,125 minutes) * I-20 = 45 minutes w/ delays
* Shea Boulevard = 35 minutes w/o delays
* 1st month of travel there where 3 traffic delays assuming 20 workdays each month
1. Assuming that this month is a good representation of all months ahead, should Edith and Mathew continue to use the highway for traveling to work? * 3 jams (workdays) * 45 minutes = 135 minutes
* 17 workdays * 25 minutes = 425 minutes
* Total = 560 minutes compared to
* 20 workdays * 35 minutes = 700 minutes when taking Shea Boulevard. Edith and Mathew should continue to use the highway because they save 140 minutes each month. 2. How would you conclusion change for the winter months, if bad weather makes it likely for traffic jams on the highway to increase to 6 days per month? * 6 jams (workdays) * 45 minutes = 270 minutes
* 14 workdays * 25 minutes = 350 minutes
* Total = 620 minutes compared to
* 20 workdays * 35 minutes = 700 minutes when taking Shea Boulevard. Edith and Mathew should still continue to take I-20 during winter months because they will continue to save time. They will save 80 minutes of time taking the highway during winter months.
3. How would your conclusion change if Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, thus reducing the probability of them getting into a jam down to only 1day per month (where on this day, the app showed no traffic jam, but a jam developed in the meantime as they were driving along the highway). The conclusion would change in that Edith and Mathew should take Shea Boulevard on days in which they know there is an accident ahead of time. Either way they should continue to take the highway unless they discover accidents ahead of time.
* 1 jams (workdays) * 45 minutes = 45 minutes
* 17 workdays (highway) * 25 minutes = 425 minutes
* 2 workdays (Shea Boulevard) * 35 minutes = 70
* Total = 540 minutes compared to
* 20 workdays * 35 minutes = 700 minutes when taking Shea Boulevard. Winter
* 1 jams (workdays) * 45 minutes = 45 minutes
* 14 workdays (highway) * 25 minutes = 350 minutes
* 5 workdays (Shea Boulevard) * 35 minutes = 175 minutes * Total = 570 minutes compared to
* 20 workdays * 35 minutes = 700 minutes when taking Shea Boulevard.
4. Further, comment on how the conclusions of this problem will change if there was no uncertainty and the highway always had traffic jams, whereas Shea Blvd was always traffic jam free? Is this scenario realistic and why? Respond substantively to at least two of your classmates’ postings * 20 workdays * 45 minutes (I-20 w/ jams) = 900 minutes. * 20 workdays * 35 minutes (Shea Boulevard) = 700 minutes. If this was the case, Edith and Mathew would take Shea Boulevard every day. The scenario can be realistic because construction could incur at some point throughout the year cause delays and an increase in accident rates.
Douglas, E. (2012). Managerial Economics (1st ed.). San Diego, CA: Bridgepoint Education.
This text is a Constellation™ course digital materials (CDM) title.