WHAT RESPONSIBILITIES (ECONOMIC, LEGAL, ETHICAL, AND PHILANTHROPIC)

DOES THE FIRM HAVE TO ITS STAKEHOLDERS?

ECONOMIC RESPONSIBILITY
The most basic responsibility of a business organization is to maximize the profitability
not only to engage to the interests of the shareholders, also to contribute to the progress of the
economy. Thus, the primary responsibility of the firm is to maximize profits and to ensure that it
can pay all taxes levied by the government. If the firm is unable to produce profitable products and
maintain sustainability, it is impossible to attend to all other succeeding social responsibilities.

LEGAL RESPONSIBILITY
Governments have now become regulators of businesses to maintain the integrity of
business practices and protect the interest of the public. Like individual members of the citizenry,
a firm also must follow all written and codified laws that concern its existence. So, the firm’s
responsibility includes having essential business permits and requirements, tax laws, labor rights,
contracts and obligations, consumer protection, and anti-trust and competition rules.

ETHICAL RESPONSIBILITY
The decisions and actions of a business organization affect the stakeholders in several
ways. The firm should follow ethical standards, norms, and values of the communities wherein it
operates. An ethically responsible business can recognize, interpret, and act upon many principles
and benefits. It can distinguish right from wrong and make decisions and actions that serve the
interests of concerned parties. Hence, the firm must have a written Code of Conduct to standardize
the way the managers and employees act and behave within an identified ethical boundary.

PHILANTHROPIC RESPONSIBILITY
Philanthropic responsibility implies that a business has to give back in some ways and
contribute to the betterment of society. However, this responsibility is not mandatory. Some
companies do not have any philanthropic programs. This is true for smaller or struggling
businesses with limited resources. But over the years, some enterprises take pride in their
charitable works. This responsibility gives them a sense of purpose, while also promoting their
public image. Of course, philanthropy does not necessarily mean giving cash donations. There are
several ways a firm can become philanthropic without spending too much. Some large businesses
hold capacity-building seminars for promising, and emerging entrepreneurs and others participate
in fundraising activities.

MONCAY, K.J.
 WHAT STRATEGIES OR ACTIONS SHOULD THE FIRM TAKE TO BEST ADDRESS
STAKEHOLDER CHALLENGES AND OPPORTUNITIES?

Conflict of interest was the primary issue in this Tyco Scandal case. The new management
in the company has elected an entirely new board of director and then assigned an independent
person to be the chairman, rather than a CEO to avoid the conflict of interest to happen again. The
actions taken by the company could be useful. However, in my opinion, the company should also
cultivate an ethical corporate culture. To do so, a code of conduct should be set by the company.
International Labor Organization mentioned that the code of conduct is a company’s statement to
explain ethical standards and applications that should be applied by the employees. The code of
conduct could promote ethical and moral deeds among the employees in the company. By
following the code of conduct, the employees could avoid themselves from convicting in a conflict
of interest. The guidelines to the code of conduct should be given to employees so that employees
could further understand it.

Besides the set of code of conduct, the company should also organize seminars and training
for the employees to teach the employees to deal with an issue that related with conflict of interest,
for example, the problem mentioned in the analysis before, which are embezzling fund, accounting
fraud, bribery, and others. Thus, leadership plays an essential role in shaping the corporate culture.
The top management must have ethical leadership so that the subordinates could have a good role
model to follow. A leader who is responsible and honest can be of help to promote and transfer his
or her ethical and moral values to the subordinates. Hence, while recruiting a new manager or
promoting an employee to become a manager, the criteria that the company must consider and
emphasize not only the ability of a person but also the person's personality and ethical view. For
the issue of inappropriate discharge of employees, I think that Tyco International should provide
sufficient notice and pay enough compensation to the employees who have been discharged. The
company should set fairness procedures in the process of discharging employees. The executive
of Tyco should know that employees are a primary stakeholder in the company. They should
protect the employee’s rights and respect them.

MONCAY, K.J.