Question

A company has chosen to contract only with companies (subcontractors) that agree to adhere to a strict code of business ethics and social responsibility.  Howmight this stance increase their bottom line (profit)? How might this decision prevent the company from maximizing profits?  Be specific. Give examples.  

Answer 1

This stance of a company will not help the company to earn short term profits and will hinder and hesitate majority of the subcontractors to work with this company. However, the real picture is that the company's stance to adhere to social responsibility and business ethics will highly help them to create a set of core values. This decision of working only with the subcontractors that will adhere to the social responsibility and business ethics will result in low profits, but in the long run, the company will be able to accrue profit and will be venerated among the customer and clients.

For example, if the company follows the strict business ethics of environmental sustainability, then it will be conducting business transactions only with companies that will adhere to the same. This will deter many subcontractors from conducting business with the company. However, in the long run, it will also find trustworthy sub-contractors and will also be able to have a big customer base.

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