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Tyco International Inc. Scandal
Business Management (BS BM)
Ateneo de Davao University
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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 its profitability not only to attend to the interests of its shareholders but also to contribute to the progress of the economy. Thus, the main responsibility of the firm is to maximize profits and to ensure that it is able to 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 in order to maintain the integrity of business practices and protect the interest of the public. Like individual members of the citizenry, a business also has an obligation to follow all written and codified laws that concern its existence. So, the firm’s responsibility includes having basic business permits and requirements, tax laws, labor rights, intellectual property rights, consumer protection, contracts and obligations, and anti-trust and competition laws.
ETHICAL RESPONSIBILITY
The decisions and actions of a business organization affect the stakeholders in several ways. The firm has an obligation to follow ethical standards, norms, and values of the communities wherein it operates. An ethically responsible business is able to recognize, interpret, and act upon multiple principles and values according to standards prescribed by a particular context or within a given field. It is able to 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 managers and employees act or behave within an identified ethical boundary.
PHILANTHROPIC RESPONSIBILITY
Philanthropic responsibility implies that a business has a duty to give back in some ways and contribute to the betterment of the society. However, this responsibility is not mandatory. There are businesses that do not have any philanthropic programs. This is especially true for smaller or struggling businesses with limited resources. But over the years, some businesses take pride of their philanthropic 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.
What strategies or actions should the firm take to best address stakeholder challenges and opportunities?
Conflict of interest was the major issue in this Tyco Scandal case. The new management in the company had elected a completely new board of director and 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 effective. However, in my opinion, the company should also cultivate an ethical corporate culture. To do so, code of conduct should be set by the company. International Labor Organization mentioned that code of conduct is a company’s statement to explain ethical standards and applications that should be apply by the employees. 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 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 in order to teach the employees to deal with issue that related with conflict of interest for example the issue mentioned in the analysis before, which are embezzling fund, accounting fraud, bribery and etc.
Whistle blowing culture should be encouraged to the employees during the training and seminars. Whistle blowing is an act that raises concern towards the person who involved in wrong doing. While promoting the whistle blowing, the company should also set up protections towards the whistle blower to protect them from the possibility of being boycott by the colleagues. The protections given could at the same time enable the whistle blower to raise the wrong doing of others without any fear. The example of the protection that can be given by the company includes keep the information of the whistle blower confidential. With a whistle blowing culture, the fraud that may happen could be reduced. Just as what had been mentioned in the case, leadership plays important role in shaping corporate culture. The top management should have ethical leadership so that the subordinates could have a good role model to follow. A leader who is responsible and honest can help promote and transfer his or her ethical and moral value to the subordinates. Hence, while recruiting new manager or promoting an employee to become a manager, the criteria that company should consider and emphasize not only the ability but also the personality and ethical view of the person. For the issue of inappropriate discharge of employees, we suggest that Tyco International should provide sufficient notice and pay sufficient compensation to the employees who have been discharged. The company should set the fairness procedures in the process of discharging employees. The executive of Tyco should know that employees are primary stakeholder in the company. They should protect the employee’s right and respect them.
Tyco International Inc. Scandal
Course: Business Management (BS BM)
University: Ateneo de Davao University
