Part 1: Ethical Decision-Making
Step 1: Facts of situation
• Neem, indigenous tree in idea, is sacred
• Neem has been used for medicinal purposes, food production, toiletries, fuel, and pesticides
• Chetan operates a business of neem products and employs 60 people
• Tom Johnson is the Director of Oregon Organic Pesticide Services (OOPS)
• Tom travelled to India on vacation and discovered the neem seeds’ use as a potent pesticide
• Tom imported neem seeds to his factory in the USA and ran experimentation where he then developed a formula for an organic pesticide
• Tom’s company invested $5 million to conduct extensive safety and performance tests over the next decade
• Tom’s company got security clearances from the EPA
• OOPS wants to set up a subsidiary business in the rapidly emerging market of India
• He got a patent for the pesticide and made a profit of $12.5 million in a year
• He can sell the product at a lower price than Chetan and reduce his business
• Tom demands a royalty from Chetan
Steps 2/3: Stakeholders and Motivations
1. Chetan
• Wants to make profit on their neem tree products
• Wants to run a stable, successful business that employs local people
2. Environmental Protect Agency (EPA)
• Wants to ensure public health, safety and wellbeing
• Wants to ensure the environment is not at risk of destruction
• No negative environmental consequences occur when pesticides are used
3. Oregon Organic Pesticide Services (OOPS)
• Wants people to buy the pesticide, producing company profit, allowing business to scale and expand
• Wants patent that was filed to be followed and enforced
4. Tom
• Social impact and improving the environment with organic products
• Make profit
• Expand business by tapping into Indian market
5. Indian cottage industries
• Want social mobility
• Want their communities to be profitable/ have good business
6. Farmers
• Want crops that are consistently producing good yields
7. Consumers
• Want a price that is lower cost or the same cost as before
• Want an effective product
8. Indian and US government
• Want to improve local economy
• Responsibility to protect Indian business owners
What rights does Chetan have?
Chetan does not have any legal rights to the neem pesticide products. Once there is a patent on it, he is not legally allowed to sell these products. However, they do have rights to their other products such as skin creams, contraceptives, lamp oil and many other products because these have not been protected by any patents thus far. The company could try to fight back and claim that the patent involved bioprospecting and exploits indigenous forms of knowledge. Unfortunately, the US does not believe that “prior existing knowledge” is enough to reject a patent. The “existing knowledge” is only recognized if it is published in a journal, not if it has been passed down through generations of oral and folk traditions.
Is it ethical for the US company to uphold their patent rights?
Our team believes that it is ethical for OOPS to uphold their patent rights (especially because the p, but it is not moral. They are only taking legal actions, but taking business away from Chetan and on top of that, charging a royalty.
Step 4: Possible solutions
1. Start pushing the other products they manufacturer such as skin creams, contraceptives and lamp oil.
• Ethical or principal code: Duty-based thinking. This solution respects people as ends in themselves.
• Pros: Chetan won’t have to fire employees, they will still have an income, continue to produce profitable neem products.
• Cons: Lose market share because they are losing the pesticide. Business may struggle until other products rise in popularity.
2. Chetan can suggest a merge with OOPS
• Ethical or principle code: Utilitarianism. This solution aims to produce the greatest overall good for all affected.
• Pros: Chetan won’t have to fire employees, CSR for OOPS.
• Cons: Chetan can’t function independently, have to rely on OOPS for decision making
3. Chetan finds loopholes in the US patent. They then choose to alter formula to make it slightly different from what is currently patented by OOPS.
• Ethical or principle code: Virtue. This solution aims to exercise appropriate justice and maintains integrity for Chetan.
• Pros: Produce an environmentally friendly product that is similar to OOPS, won’t have to fire employees.
• Cons: still cannot produce it as cheaply as OOPS.
Step 5: Seek Additional Assistance
https://hbr.org/1996/09/values-in-tension-ethics-away-from-home (This link has an article which talks about core values and the three guiding principles.) http://guweb2.gonzaga.edu/faculty/alfino/dossier/Papers/COPYRIGH.htm (This link provides in depth information about intellectual property and copyright ethics.) http://news.bbc.co.uk/2/hi/science/nature/4333627.stm (This link provides information on how India has won a 10-year-long battle at the European Patent Office (EPO) against a patent granted on an anti-fungal product, derived from neem.)
Step 6: Best Plan of Action
Solution 2: Suggest a merge with OOPS
OOPS is able to produce products at a lower cost than Chetan due to economies of scale. Although Chetan technically has rights to products other than pesticides, OOPS could easily get these products patented, and Chetan cannot due to lack of resources. Additionally, even if Chetan finds a loophole in the patent and creates a new formula for pesticides, OOPS will still be able to produce it at a lower cost and Chetan will still lose business. Therefore, it is in Chetan’s best interest to merge with OOPS. This way, Chetan’s employees will still have a job. Chetan and OOPS are not fair competition, and it is not worth it for Chetan to try to compete. Although they won’t be able to function independently, they will be able to still benefit from the venture.
Step 7: What are the implications of your solution on the venture
• The environment and people’s health will likely improve because an organic pesticide will be used
• OOPS is well respected because they chose to partner with another company that improves the livelihood of workers in the Indian cottage industries.
• Chetan is able to have a sustainable business that people look up to/trust because they partner with a US company
• People in the cottage industry have jobs, causing the local economy to improve
• People will have a greater awareness of organic pesticides in India
Part 2: Grassroots diplomacy
Step 1: Facts
• 6 months later, OOPs has 20 different neem-based products being sold in India
• Most successful product is neem-based soap
• Soap wrapper features photo of Tom Johnson
• Chetan’s wrapper features a photo of his great grandfather (local legend)
• Chetan met with Tom Johnson several times and Tom is open to a collaboration
• Chetan’s business is suffering and he’ll have to lay off half his staff
• Half his staff feels cheated by Chetan, and the other half is confident that Chetan will find his way out
Step 2/ 3: Determine and distinguish between the personal and professional motivations of the stakeholders
The problem: Chetan needs to figure out a way to keep the business profitable all while protecting staff’s integrity and maintaining their trust.
Stakeholders:
• Chetan:
Personal:Protect his employees, Continue to make money, Maintaining his 7 generation family business
Professional: A successful business
• Tom/OOPS
Personal: Make money
Professional: Expand the business
• Chetan’s employees
Personal: Want the business to continue to be respected and carry the reputation that it has earned for the past few decades
Professional: Want to make money
Step 4: Formulate (at least three) alternative solutions – based on information available, to have a win-win situation for your relationship and your venture.
Solution 1: partner with Tom Johnson and request that he hire his loyal employees
• Pros: Keeps Chetan’s employees employed, OOPS gains all of Chetan’s loyal customers and therefore makes money
• Difficult to compete with OOPS because it is dominant and more powerful
• Cons: Chetan loses some of the history of his company, Great grandfather will no longer be on the wrappers, Chetan loses the name of his company, Potentially lose Chetan’s employees
• The solution saves face with Chetan’s employees by securing them a job so they can continue to make money.
Implications of relationships:
• Short term: Chetan’s employees may feel like they are being betrayed by Chetan working with an American company
• Long term: eventually the employees will get over their resentments because they are still making money
Implications of venture:
• Short term: collaboration with OOPS
• Long term: Chetan’s business will most likely be completely consumed by OOPS
Solution 2: Dissolve the business and retire as a wealthy man
• Pros: Doesn’t have to compete with OOPS, Retires with money as opposed to losing the rest of it if he continues with an unsuccessful company, Maintains integrity of business and preserves family traditions
• Cons: Disregards all of his employees and changes their opinion of him, Community will dislike him
• This solution saves face with OOPS because he stops competing, but does not save face with the rest of the stakeholders.
Implications of relationships:
• Short term: employees will dislike Chetan
• Long term: employees will still dislike Chetan
Implications of venture:
• Short term: No more income, no more presence in the community
• Long term: The legend of his great-grandfather may be forgotten
Solution 3: Tom uses Chetan’s image on the soap to take advantage of his public image and reputation
• Pros: Chetan could be compensated for using his soap image, Chetan allows the legend of his great-grandfather to live on, Community has a greater trust and respect for OOPS, which will hopefully incentivize them to purchase it
• Cons: The product isn’t a family recipe, it doesn’t fully maintain the integrity of the family brand, More expensive for OOPS to do/more work for them to create a more differentiated product, Where will Chetan’s employees go? Will they work for OOPS?
• The solution saves face for OOPS by making it seem that they didn’t totally exploit Chetan’s family business. They chose to give recognition to local tradition and values.
Implications on relationships:
• Short term: People will remember Chetan’s great-grandfather and its family business origins
• Long term: People may resent Chetan for not having preserving his original family recipe
Implications on venture:
• Short term: Chetan’s employees will have to find work at OOPs or somewhere else
• Long term: Chetan can maintain is brand awareness and recognition, OOPS will gain more business because of their cheap prices and involvement with the local community traditions
Step 5: Seek additional assistance, as appropriate – previous cases, peers, reliance on personal experience, inner reflection
Same resources as described in part 1.
Step 6: Select the best course of action – that solves the problem, saves face and has the best short term and long-term implications for your relationship and venture. Explain reasoning and discuss your solution vis-a-vis other approaches discussed in class.
I think that solution 1 is the best possible course of action for Chetan. The Chetan family is well off and so their primary concern or source of guilt is what to do with its employees. The partnership with Tom Johnson does not need to be extensive, as long as his employees are well taken care of, the community will be happy. Once OPPS starts to get more comfortable with the partnership, Chetan could propose solution 3 (Chetan’s grandfathers image is on soap) as a way to increase revenue among local buyers. This would solve the issue of how to preserve Chetan’s history and the great-grandfathers legend.
Step 7: List the sequence of actions you will take to implement your solution.
As Chetan, I would illustrate to Tom Johnson how important his family history is to the local people and how they would be much more likely to purchase his product if he partnered with Chetan. Tom said he was “open to a collaboration if it would help him make more money,” so if Chetan frames the partnership as profit generating, he will likely be able to establish a deal with OOPS. When they are proposing ways for how to go about the partnership, Chetan can suggest the labeling of the great-grandfather.