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Key Concepts and Vocabulary • profitability • social responsibility • green • stakeholderism • normative approach • instrumental approach • sustainable growth Profitability Profitability is efficiency of a company or industry at generating earnings. Earnings are defined as the total income minus total expenses Concepts of Social Responsibility: Stakeholder and Contemporary Social responsibility is the attempt of an organization to balance his or her commitments to groups and individuals in its environment, including customers, other businesses, employees, and investors. • The Stakeholder Model of Responsibility Most companies that strive to be responsible to their stakeholders concentrate on five main groups: customers, employees, investors, suppliers, and local communities. • Contemporary Social Consciousness Social consciousness and views continue to evolve toward an enlightened view stressing the need for a greater social role for business. For instance, Sears and Target stores refuse to sell handguns and other weapons. Areas of social responsibility include: • Responsibility to the employee. This includes protection from discrimination and harassment as well as providing a safe and healthy work environment. • Responsibility to the customers. This includes fair labeling, safe products, and honest advertising. • Responsibility toward the environment. This may include using methods of production that do not pollute and recycling. Green Following a course of action that is environmentally friendly. Stakeholderism The corporation is a complex community with shared contracts, agreements, and culture among its inhabitants; that is, anyone who has a stake in it. The firm is called upon to address the interests of a wide range of constituencies and promote symbiotic relationships with them. There are two approaches to stakeholderism: Instrumental approach – the corporation should try to ascertain treatment of customers, supplier, etc. will maximize profits. Normative approach – calling for business owners to resolve to do the right thing and then work out how to make that goal fit into a business model. Sustainable Growth Building an economy that generates wealth while helping to save the planet.