1.

Introduction

It has become essential for any business to be competitive and profitable in the market to survive
and to provide benefits, businesses without profits are nothing but wastage of resources. As
world has become a global village, many businesses have started operating in different countries,
considering these multinationals businesses, ethical standards are being mainly focused.
Operating in different nations makes it important to be concerned about the ethical ways of doing
business.

2. Theoretical framework
Many economists and researchers have talked about the importance of ethics and the way
company should be run. During 1990s, Friedman talked about a business and its only objective,
according to him, a business should only focus to increase the profitability of the company and
its stakeholders. Further, a successful businesss center of understanding is profit, and corporate
social responsibility is just a resistance to their objective. There is a contradiction between the
interests of a stakeholder and a shareholder, social responsibility which is the main interest of a
stakeholder is considered as an expense in the account of shareholder of a business. According to
neoclassical economic theory, a business is only operating to maximize their profit, today, on the
other hand, importance of stakeholders has increased, and interests of the stakeholders are
mainly focused while operating a business. A one who is directly or indirectly associated with

the business is called a stakeholder, considering the interests, ideas and benefits of a stakeholder
is the main point of consideration for the businesses operating today. Todays belief is that a
business is not made up of only shareholders, or the people who invests their money in that
business, but a business is made up of stakeholder, in which employees, suppliers, customers,
dealers, distributors, lenders, vendors and everyone directly or indirectly associated with it, are
included. Although, many multinationals are operating in the nations where regulatory
authorities are not that much involved in their businesses.
Recent approaches says that a business must consider its responsibility towards the stakeholders
interests and rights, but multinationals which are operating in the nations with no or less
authorities are acting opposite, they are following the Friedmans approach of maximizing profit.
To learn more about this topic, this research is focused on the characteristics of stakeholders
approach, how it explains to balance the rights of stakeholders and society and to maximize longterm profit, and how the multinationals are operating nowadays, how should they perform to
maximize their long-term profit and to fulfill their responsibility towards its stakeholders.
During 20th century, many incidents took place caused by the multinational, which shows the
importance of stakeholders approach, these examples include disaster formed by the Exxon
Valdez and Dow Chemicals, these examples shows that if the proper regulations are formed and
applied on the multinationals, it may lead to further issues related to the health and safety.
According to Mehmet and Mendes (2003), corporate social guidelines have become essential to
implement on the multinationals to prevent further disaster. Also, the immediate withholding
important information, denying and downplaying patterns are obvious in corporate activities. As
a result, these activities have a devastating effect on local communities. Mehmet and Mendes

(2003), argued that this exercise of ultimate use of power and evasion of responsibility is a grave
discrepancy in global corporations practices.
Furthermore, researchers and critics are interested in the way how a multinational is operating
and its responsibilities towards the people associated with it, many standards are formed to guide
the multinationals to become a responsible and successful business. Although, many legal
obligations are being enforced on the multinationals, but, these enforcements are not able enough
to restrain them from unethical operations, which results in more worsen situations. If a company
wants sustainability and long term profit, it should follow the stakeholders approach, which is
highly focused towards the continuous development and fulfilled ethical and social
responsibilities, by this act of a company, it would be able to survive in a borderless and
competitive economy. People which are directly or indirectly associated with a business, and
without their presence, a business is not able survive, are known as stakeholders (Freeman 1984).
Because of this approach, a business must identify its stakeholders as they are the one who are
influenced by the activities performed in an organization.
There are many companies which are interested in long term and persisting growth, and are
following stakeholders approach, which talks about ethical, social and corporate responsibilities.
These entities have changed their belief of only maximization of profit, towards the approach
which says that in order to be sustainable, competitive, and successful in this global market, they
should be highly promoting and increasing their corporate social responsibilities and following
ethical standards.
Also, management who focuses on stakeholders approach and encourages loyalty towards them
usually has conflicts with the shareholders because maximization of profit is good for

shareholders not the management (Radin 2003). In order to resolve these conflicts, management
should try to be the most profitable organization, and not to increase the expenses which are
implied in fulfilling the corporate social responsibility. Kennedy argued that the shareholder
value theory of the corporate world, though perfectly valid, went wrong in its exploitation of
stakeholders when it forced their backs so much to the wall that each and every one of them had
to respond aggressively, so that the future viability of corporations is today threatened
(Kennedy, p. 206). It is the responsibility of the management to balance the interests of both
shareholders and stakeholders. If we consider religion, norms and values of a society, idea of
being right is good and many enterprises are also concerned about it, but this thought doesnt
belongs to the financial or economic sections. This fact is applied on organizations, society and
individuals as well. Many issues which are not visible to a critic are there and would be faced by
a multinational if it tries to fulfill all the standards and laws, and form ethical regulations for
them.

3. Company and case introduction

5. Major issues discussed in case

6. Analysis of the case findings

7. Conclusion