Is it true that the bottom line of business is profit and profit alone?

IS IT TRUE THAT THE BOTTOM LINE OF BUSINESS IS PROFIT 7

Isittruethatthebottom lineof businessis profitandprofitalone?

“BottomLine” of Modern Enterprise

Canmodernbusinessenterprisethriveby profitonly?Theconceptthatbusinessenterpriseshould be a profitmaximizer has beena mantra that has beenregardedas trueandnothingbuttrueformanyyears.Thishas beenone of themostcontroversialissuesinthe corporateworld(McCann,2000). Whilemanyscholarsagreethatbusinessexecutivesought to relaxtheir conditionof profitmaximization as a moraldutyandfortheinterestof thesociety,manybusinessleadersstillholddearthenotionthat an enterpriseis a machinethat combinesvariousfactorsof productionfunctioningintandemto maximize profits(MacKennna, 2013).Thisexampleof the“bottom line”of businesshas beenexhibitedformanydecades by publiclydisparagedfirms, fordeceitfulactivitiessuchas HealthSouth andEnron among manyotherenterprises. Corporate leadersin thesefirmswerereadyto sacrificethevastmajorityandgreatergoodof thesocietytheyserveforthebenefitof a fewin thenameof profitgains.Thisframeof mindleftmanyloyalstakeholders, includinginvestor, consumersandevenemployeeswithout a soundsteadyoutlook(MacKennna, 2013).

Thereare numerousenterprises that manufacturea highyield on their venture.Nonetheless,thecommodityitself createsethicaldeliberationas a resultof thepotentialriskto theconsumerandthehealthhazardconnectedwiththeconsumptionof theproduct(MacKennna, 2013). Thegistof thisstatementis “bottom line”of businessencompassesprofitbutisnot limitedto generatingprofitalone(Slaper &amp Hall, 2011). Firms that centertheir attentionmakingprofitalonelacksustainability andseemto operateon thepreceptof theancientaxiomthat“businessis a profit-makingmachine”.To supporttheargumentthata businessmissionis not justto makeprofit,weshall usetheframeworkputforward by John Elkington to appraisetheperformanceofcorporationsin America. Thetriplebottom line(TBL) modelillustrateswhya modernfirmsshould not be concerned about maximizing profitmargins(Savitz, &amp Weber, 2013). TheTBL focuseson social,environmental andeconomicfactors.Thefacetsmentioned aboveare alsocommonlyreferredto as thethree Ps: people,planet,andprofits.Theframeworkputforward by Elkington quantifies sustainability on three differentlevels allowingcorporate leadersto moresuccinctly forecastthelong-term connotationsof their decisionsandchoices(Slaper &amp Hall, 2011).

Environmental,Profit andpeopleas partof Business Agenda

Thispapershall exemplifythethree Ps facetsandtheethicalconnotationsof theseelementsfrom a businessstandpointto perk up sustainability of theenvironmentandcommunity.Itis importantto beginthisdiscourseby pointingthatwhatisperceivedas beneficialandrightfora communityoran areamay not necessarilybe goodforprofitability (Savitz, &amp Weber, 2013). Itis crystal clear in thecorporate worldthatbusinessyield andmoralityare nevergoodbedfellows. Inthislightfirms that applyTBL (considerthepeople,planetandprofits)outlinehavecodeof conductandpolicyproceduressetin placeto protectthefirm,employees,customers,stakeholders andlocalcommunitiesfrom damage.Intheory,thesefirmsshould givereasonablewages,offerhealthcare securityfortheworkforce andadhere to thesetlaborlawsbecauseof thesolereasonthatthisis theaptthingto don(Slaper &amp Hall, 2011).

Eventhoughin manycountrieslaborlawsare in place,firms alwayslookforloopholes.Forexamplein themoderndaysthere are alwayscomplainsof largecompaniessuchas Nike usingchildlaborin overseasindustrialunits,issuesof Walmart underpaying its workforce anddebatesabout thelinkbetween Macdonald’s andoverweight andobesity (Slaper &amp Hall, 2011).Whileitis evidentthatmostof thesefirms providejobopportunitiesformanyAmericans, theyalsoexertan indirectcoston thepopulaceby underpaying their workforce (Savitz, &amp Weber, 2013). Itis not wonderthatmostof theindividualswhotradelaborin theselargecorporate enterprises are primebeneficiariesof thegovernmentaidin their states.On theotherside,theshareholdersandownersof thesecorporationsare among therichestfamiliesin theworld.Conversely,ifthesefirms are not ableto operatelucratively andcollapse,unemploymentin thecountrywould increase,andthiswould negatively affectthesocietyandthecommunity(Slaper &amp Hall, 2011).

Theseconddimension is theprofitoreconomicfacet.Therationaleof anybusinessin operationis to generateprofit.Evenso,ifbusinessesonlygoalis to generaterevenue,thenitis boundto fail,inthelongrun(McCann,2000). Thetriplebottom linemodelisalwayscenteredon morethan justa firm’s profitmargins.Italsofocuseson howthegeneratedprofitscan impactthesocietythat determinesthesurvivalof thefirm(Savitz, &amp Weber, 2013). Forinstanceifafirmcan generatesupernormal profits,butthecommodityproducedfrontsa healthriskto thecommunity,a hugechunkof therevenuegeneratedcould be lostin payouts, litigationsfeesandhealthconnectedtreatments.Anexcellentexampleis thelegalchargesleveledagainst Pacific Gas andElectric, consuminga whopping333million in settlementfeesto thecommunityas resultof contaminatingwaterandhenceaugmentingtheprevalenceof cancer(Slaper &amp Hall, 2011).Thisincidencejustdepictstheimportanceof incorporatingcommunityinterestin formulatinggoalsof thefirm.

Thefinaldimension relatesto theenvironment(planet).TheTBL modelfocusedon not damagingtheenvironmentandabidingby theregulationsseekingnot to upsetthestabilityofthe ecosystem.SlaperandHall (2011) suggestthatfirms that are applytheTBL modelofferadequateresourcesto organizationsandprojectscommittedto preserving,regeneratingandsustainingour planet’secosystem (Slaper &amp Hall, 2011).

Firmsthat useTBL structuredonot manufactureproductsthat can damageorharmour environmentssuchas weaponsandnoxiouschemicals.Whenthisthirddimension isignored,abusinessoperationis a recipefordisaster(McCann,2000). Agoodexamplewastheoilspill in theGulfareain 2011.Eventhough,itwaspossibleto preventthiscatastrophethecompanyhadto spendcolossalsumsof moneyto cleantheGulf.Thespill threatenedthenaturalhabitatforaquaticanimals,andresidentsfrom theaffectedregionlostrevenueandemploymentas touristsnubbedvisitingtheGulf.Afirm’s neglectandlackof propercommunicationhadcausedan environmental disasterin theGulfarea.Companiesshould showthe desireto safeguard our planetby portrayinggreateraccountability.

Conclusion

Inorderforthewheelof a businessto continueto runandflourish,thecogsin economic(profit),social(people)andenvironmental (places)ought to be runningto achievetheneedsof humanity.Itis wrongforfirms to makeprofitswithout socialresponsibility.Thethree dimensions ofthetriplebottom line(TBL) areinextricablylinked.Thesocialfactoraffectsenvironmental facetthataffectstheeconomicdimension (profit).Businessin themodernworldneedsto havea moralconscioustowards their customers.Eventhoughrevenueis veryvital,itshould not be thesolefocusbecauseifthatis thecase,failureis on thecards.Profitandprofitalonecan not, should not andought not to be “thebottom line”of runningbusinesses.Businessesthat applytheTBL modelcanforecasteminentpitfallsandavertdisasterthat can bemadeby managerswhosefocal pointis generatingprofitalone.Allfirms should putin placeethicalstandardssothatexecutiveshavea guideline that shapestheir conductanddecisions,andthatensuresthattheinterestof thecommunityandsustainability of our environmentandtheir profitsarebalanced.Theactionsof businessthat operatetodaywill affectthelivesof generationsto come,andcorporate leadersshould understandthat“bottom line”is morethan profitmargins.

References

MacKennna,S. (2013). HowOveremphasizing Profit Erodes Your Bottom Line. Mvleodand More Inc.Retrieved from:http://www.mcleodandmore.com/resources/sales-leadership-tips/how-overemphasizing-profit-erodes-your-bottom-line/

McCann,D.P. (2000). Controversy: Do Corporations Have Any ResponsibilityBeyond Making a Profit? A Response to Norman P. Barry.Centerfor Economic Personalism.Journal of Markets &amp Morality 3, no. 1

Savitz,A. W., &amp Weber, K. (2013). Thetriple bottom line: How today`s best-run companies are achievingeconomic, social and environmental success — and how you can too.San Francisco, Calif: Jossey-Bass.

Slaper,T. F., &amp Hall, T. J. (2011). TheTriple Bottom Line: What Is It and How Does It Work?.Indiana Business Review, 86 (1)