Means and Ends in Business

Means and Ends in Business

Means and Ends in Business Decision Making

Now let us look at how managers go about making socially responsible decisions. First, there is the matter of the factual and ethical content of business decisions. Every decision contains a factual element in the sense that it implies a set of factual consequences. For example, a management decision to introduce a new product might be based on the following line of reasoning:

The new product will increase sales, expand the firm's share of the market, lead to larger profits, and result in greater stockholder dividends. These consequences of the decision are factual in the sense that they are susceptible to empirical proof. "In principle, factual propositions may be tested to determine whether they are true or false-whether what they say about the world actually occurs, or whether it does not."6 Either sales increase or they do not; the corporation's market share expands or it does not; and profits and dividends go up or they do not.

Decisions also contain an ethical element. When management is in a decision-making situation, there generally are many different alternatives that might be selected. Each one leads to a particular stream of events in the future. Thus when management makes a decision,(Health and safety ) in effect it selects one state of anticipated affairs in preference to others. Whether or not this outcome is better than any of the other possible alternatives is a matter of ethical judgment rather than of fact.

For example, suppose management has decided to introduce a new product and now must decide which of two different items to bring out. The first has the potential to greatly increase sales, substantially expand the firm's share of its most important market, and greatly enhance the corporate image with the public. But heavy research and development outlays and advertising and promotional expenditures will be required to successfully introduce this product, and the net addition to corporate profits that it can be expected to produce in the short run will be slight. The second product will develop a new market rapidly, have a relatively slight impact on the corporate image, and produce a larger net profit than the first one. One cannot decide which of the two products to introduce without making an ethical judgment. to say that one outcome is better than the other is to say "what ought to be," and this is a subjective ethical matter rather than an objective factual one.

The source of the ethical element in business decisions is the objective of the enterprise. Business decisions are purposive-they are intended to lead to the attainment of certain desired ends by organizing and manipulating available means. Each decision is at the same time a means and an end. In our example the new product to be introduced is a means to the end of increased sales. But increased sales is itself the means to the end of greater profit, and the latter is a means to the end of more dividends. Thus there is a hierarchy of means and ends in business decision making. At the source of this hierarchy is the objective of the enterprise, the reason for which it was founded and/or continues to exist.

All business decisions play a part in the means-ends network which develops to achieve this objective.

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