Reference no: EM132498296

Case 1:

Determining how much ethics with profitability plays a role in decision making can reduce corporate values ??and mission statements. The CEO must run the business in a way that reflects the culture of the organization whether it means focusing more on profit rather than ethics or vice versa. To ensure that harmony, businesses must establish a code of ethics. (The Code of Business Ethics reflects the actions and values ??we hold in interacting with all EPI stakeholders - employees, customers, governments, partners and communities to build long-term relationships with them). Examples such as:

• Establish the meaning of the code and why it is so important.
• In line with the organization's core values.
• Use clear and simple language that is understandable.
• Offering real-life examples to help employees make decisions at all levels of the organization.
• Make and explain the consequences of violating the company's code of conduct.
• Provides a system for employees to ask questions or report violations of any code.
• Be reviewed and updated annually.

The CEO does have the responsibility to keep the business profitable. Their success often depends on the income statement. But some businesses also have high ethical standards. There is no doubt that CEOs often face difficult decisions that can have a negative impact on employees or customers. That does not mean that it was a wrong decision. CEOs must keep their company's ethical barometer close and not just because something is legal, doesn't always mean it's true. On the other hand, just because a decision can be seen as cruel, does not mean it is the wrong choice for the long-term survival of the organization.

Reference:

https://www.forbes.com/sites/raquelbaldelomar/2016/07/21/where-is-the-line-between-what-is-ethical-and-legal/#121c1122250b

Case 2:

a. In my opinion, the management of Valeant companies is very wrong, it violates the first and fourth principles of the "Clarkson Principles" of Stakeholder Management. The first principle of the Clarkson principles is, "Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account is decision making and operations." Whereas the fourth principle is, "Managers should recognize the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risk and vulnerabilities". Companies have raised drug prices so high, many times in their own interests, that they violate these principles, which must weigh their interests appropriately and consider the risks involved. But the company did not consider it, he only thought of his own company to get the maximum possible profit. He even said that the responsibility of the company is to shareholders, not customers who rely on drugs for life. That's very cruel because just to increase the company's profit, he doesn't think of anyone else who really needs the drug. When a market's purpose is for societal health, such as; fire departments, law enforcement, healthcare, education, military, etc. The manifest purpose of these markets is to serve the people not the shareholders. These types of markets will never function properly when the main focus is to generate revenue. Stakeholders in the company were devastated.

b. My recommendation for the Valeant government agency is that it must apply all the principles of the stakeholders because these principles are the initial stage of general awareness of corporate governance issues. And the Valeant government agency must also have social responsibility or commonly known as CSR (Corporate Social Responsibility) to its stakeholders if it wants its company to continue to operate in the long term, especially in terms of maximizing profits, and to balance the roles and relationships between stakeholders. Examples of social responsibility, such as social responsibility to employees, consumers, suppliers, shareholders, and the environment. Valeant's governing body also needs to create interactive relationships, namely relationships that respect each other, trust and are open, so that this relationship will continue and Valeant's governing body will not only think of increasing more profits, but it will also think about the needs of shareholders his. So the company will continue to run in the long run and will get more profit, without any obstacles.
Reference: https://binus.ac.id/malang/2018/10/stakeholder-dan-tanggung-jawab-sosial-perusahaan/