Business administration


This is a report of an assignment we got for the course of Introduction to Business Administration1. The assignment (practical exercise) is to explain the main concepts and theories of the chosen chapter in a short summary and motivate the answers of the assign case.

Our case contains 5 question regard the Responsibilities of a Business. In this case the business' name is “Cool Jewel Company”.

The main purpose of business is to generate maximum profit.

Therefore, should the business pursue all possible sources to elevate the profitability of the business?

Each firm has responsibility towards its stakeholders. The business should behave ethically in achieving the above goal. Not just by operating within the letter of the law. The firm must be aware and recognize that it may and can affect the society and environment and more broadly the business' customers, employees, stockholders and creditors. This term is the social responsibility of a business. Every decision that the firm makes to increase its value must be examine based on the decision to not violate its ethics and social responsibility on the long term of the business value and social responsibility

Madura,(2007a), Personal communication,(2009)

Chapter. 1


Every firm has certain responsibility towards its stakeholders. A set of values that conduct the behavior of this firm. They call it the social responsibility of the firm. This is the responsibility that each firm has with the society and environment and more broadly the business' customers, employees, stockholders and creditors. Every decision that the firm makes to increase its value may and has consequence in one of these sectors.

As a good illustration we have Cool Jewel. Using this company as an example in chapter 2. Showing how import it's for the company to be aware of responsibility towards it's costumers. By gaining the costumers trust. Providing them with the correct information of the product. Your build up an image that you company can be trusted. And encourage more people to buy from you firm. Then we have responsibility towards its employees by providing guidelines that protect the employees. The possibility to follow cursors to improve their skills and hiring the right people without discrimination of any type. “A satisfy employee perform better.” (Madura,2007a)

Responsibility towards stockholders inform the investors about the state of the company. Keep them satisfy. Responsibility towards the creditors by providing the correct information to the creditors. The last but not least ensure the responsibility towards society and environment. Production process that can be harmful for the environment. Most common form of pollution is air and land. A good example of air pollution is the production of automobile. Some example giving of how to prevent is by changing the production process. Example of land pollution solid waste. Example plastic bags. How to prevent this reduce the production of this, Or by Recycling. The firm and the community, the company knows that the community is important. Communities are their potential buyers. So the company must make themselves part of the community, show the people that their care. And by doing so the company make themselves visible.


Chapter. 2

Summary Case.

Cool Jewel company sells costume Jewelry. It's sales people receive a commission based on the amount of product that the sell. The business attempts to meet social responsibilities in the following ways. It warms the sales people that they must tell costumers that the jewelry is not real gold; it has established guidelines to ensure fair treatment toward employees. It provides safety training to employees who make the jewelry. It also has policy stating that sexual harassment will not be tolerated. It relies on creditors for funding. It plants to do some community service in order to increase its visibility. It considered giving cash awards for accomplishments by people in the community. Alternatively, providing jewelry that its name inscribed on it to these people.

Chapter. 3

Question and Answers

Business responsibility is a set of obligations and duties regarding product quality and treatment of customers, employees and owners that a firm should fulfill when conducting a business. (Madura,2007a)

1. Responsibility to customers.

How can honest sales practices result in higher sales over time?

Well, by telling your clients that the jewelry you sell isn't real but from good quality shows them that you are loyal to them. The customers will trust your company even more because you're not lying to them. It's very important to always tell the truth to the customers. By telling them that the gold is fake, will make them come back and buy more jewelry from you because they trust you and know that you have good quality jewelry.

2. Responsibility to employees.

Why might Cool Jewel's policies for employees reduce employee turnover and expenses?

The Cool Jewel policy states that Sexual harassment isn't tolerated. They also have to follow different safety trainings to upgrade their security. By following the guidelines provided by the company, you can easily avoid this kind of situations. You will then avoid sexual harassment because the guideline states what is considered sexual harassment and what the consequences are. That's why they can reduce their expenses because no one will have to sue a colleague for sexual harassment or other prohibited things.


3. Responsibility to creditors

A cool jewel has borrowed some funds from creditors in the past. Why would the owner fulfill the company's obligations to creditors before granting himself a bonus?

In order for cool jewel to keep existing without go bankruptcy cool jewel had to pay what it owes to the creditors. These creditors provide the sufficient financial fund for cool jewel to keep his doors open. So before granting any himself/ herself any bonus the owner. Owners must pay to cover its obligation towards the creditors. Because these creditors make it possible for him / her to have cool jewel in the first place.


4. Responsibility to community

If Cool jewel wants to increase its visibility, should it give cash awards for accomplishments by people in the community, or should it provide free jewelry that has its name inscribe to these people?

Why not give money,

If you give as reward cash prizes, you as Company will increase your visibility in the community. But by giving money you let the your potential buyers have the “choice” to buy in whatever they want, with the cash. After one week they wouldn't even remember that Cool jewel had given it to them.

On the other hand,

Community service that would be visible for the community, with jewelry with its name inscribe.

Cool jewel, would be able to demonstrate its responsibility towards the community and gain something back. By providing this providing inscribed jewelry, Cool jewel can make sure that the communities know about its product. Even after 3 years the people who had been rewarded would know where they got the piece of jewelry because the name is inscribe. It's a form of advertisement for the company. So while Cool jewel ensure its responsibility towards the company, its increase the recognition in this community that is of course its potential buyers.

Cool jewel should definitely provide free jewelry with its name inscribe.

For the company this is a win. (Madura,2007a)


Using Cool Jewel as an example in chapter 2. We have learned that firms have many responsibilities. By setting some guidelines or values. Firms can achieve their goal by behaving ethically. They call this behavior the social responsibility of the firm. Every decision that the firm makes to increase its value have a impact on the society and environment and more broadly the business' customers, employees, stockholders and creditors. And this impact can be seen in the business. Afterwards. It is very important that firm know how social responsibility of the firm is. (Madura,2007a)
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