Part I

Step 1:
– Azadirachta indica (Neem) is a tree indigenous to India
– Neem is sacred
– Neem has been used for over 2,000 years for medical purposes, food production, toiletries, fuel, and pesticides
– Over 100,000 people in India are employed in the Neem industry
– Chetan lives in Agra, India and operates a small business making and selling Neem products
– Chetan’s business employs 60 people
– Chetan does not know the exact name of the neem seed extract, Azadirachtin
– Tom Johnson is developing neem seed pesticides as part of his company OOPS
– Johnson’s company invested $5 million to conduct safety and performance tests over last decade
– Tom’s company has a worldwide patent for the pesticide use produced from neem seeds
– Tom has made profit of $12.5 million during his first year
– OOPS wants to sell their neem products in India
– Because of their patent, OOPS is demanding a royalty from Chetan’s business and other small industries that make neem-based pesticides
– Ethical dilemma: Is it ethical for OOPS to charge Cheetan and other Indian business for their use of neem, even though they have been making the products for centuries? What rights does Cheetan have? Is it ethical for a US company to enforce patent rights in this situation?

Steps 2 & 3: Define the stakeholders and assess their motivations
1. Cheetan
– Wants a successful business
– Wants to be loyal to his employees and customers
– Doesn’t want to pay royalties on a product his family has been selling for decades
– Wants to support his family
– Wants to maintain the dignity of his family legacy (the company) and his culture (neem is sacred)
2. Cheetan’s employees
– Want to provide for their families and maintain jobs
3. Tom Johnson (OOPS)
– Make money
– Expand into Indian market
– Have his patent and investment in safety testing respected
– Make royalties off of patent
– Consumers of Neem products in India
– Want the purchase neem products for the lowest cost

Step 4: Formulate alternative solutions

1. Cheetan pays the patent royalties to OOPS
– Pros: Tom and his company get the patent royalties which they are legally owed, and which they spent a lot of time and money investing in. Tom’s product is a cheaper option for customers.
– Cons: Cheetan loses a lot of money on paying the patents, and may have to lay off employees who he can no longer afford to employ.

2. Cheetan does not pay the patent royalties
– Pros: Cheetan can continue selling his products, although he may still have increased competition from Tom. Although this would be illegal, ethically it would be okay. Ethically, neem is sacred, a natural product, and has been used for years, therefore, it wouldn’t be unethical to keep selling the product. This option gives the best chance for Cheetan to keep his employees, and maintain those relationships.
– Cons: Tom would lose money on royalties, but could still make money selling the product. The customers may not be able to access the product for as cheaply as option 1.

3. Cheetan works with other Neem-based companies to get the patent revoked in India.
– Pros: Cheetan could continue selling his product without paying royalties, legally.
– Cons: This may be a very expensive, timely process for all stakeholders. Therefore Cheetan may have to layoff employees.

Step 5: Seek additional assistance
During class discussion, Prof. Cheng mentioned that it was illegal to patent a natural resource.

Step 6: Select the best course of action
Cheetan does not pay the patent royalties. Although this is technically illegal, it is ethically okay. It is unethical for OOPS to charge Cheetan and other Indian business for their use of neem, since it is a natural, sacred product, and they have been making the products for centuries.

Step 7: What are the implications of your solution on the venture
– Technological: no impact, both Tom and Cheetan can continue making their product
– Economic: This is the cheapest option for all parties involved, except that Tom will not make money off of the royalties
– Social: Cheetan may face backlash from the government for ignoring the patent laws. Socially, this is the best option for – – Cheetan and his employees, since Cheetan will lose the least amount of money and can keep his employees.
– Environmental: no impact, neem has already been proven environmentally friendly.

Part II

Step 1: Determine the facts of the situation:
– See Part I
– OOPS launched 6 months ago and has expanded throughout the Indian market
– Neem-based soap is their most success product
OOPS wrapper features a photo of Tom Johnson
– Cheetan’s wrapper features a photo of the founder’s great grandfather
– Chetan has tried to convince Tom to leave the market, but Tom will not. He is open to collaboration, however, if it will make him money
– Cheetan’s business if suffering because of the reduced market share
– Because of the lost revenue, Cheetan will have to lay off half his staff if nothing is done
– Cheetan is very loyal to his employees, since the employees and families have worked with him for centuries
– Chetan will not suffer as much from declining business because of his investments
– Cheetan’s employees know he met with Tom and believe he has cut a deal with Tom/OOPS

Step 2: Define the problem and stakeholders:
Problem: Tom’s company is dominating the market, and Cheetan’s business is suffering. Unless something is done, Cheetan will have to layoff half of his employees, with whom he has very deep-rooted loyalties.

Step 3: Determine and distinguish between the personal and professional motivations of the major stakeholders
1. Cheetan
– Personal: wants to maintain family legacy, and help his employees as much as possible
– Professional: Wants to keep is business afloat
2. Cheetan’s employees
– Personal: want to provide for their families
– Professional: want to feel respected by their employer, Cheetan
3. Tom Johnson (OOPS)
– Personal: Wants to run successful business
– Professional: wants to keep business going, keep control of market, and keep making money

Step 4: Formulate alternative solutions
1. Cheetan closes his business but negotiates with Tom to find jobs for his employees at OOPS
– How does it solve problem:
– Pros: Cheetan’s employees have jobs, Tom keeps making money, Cheetan feels good maintaining loyalty to employees
– Cons: Cheetan’s family legacy dies
– Implication on relationships: Cheetan maintains relationship with employee since they stay employed.
– Implications on venture: Cheetan’s business closes, but Tom’s business thrives.

2. Cheetan leverages his brand to make a mutually beneficial deal with Tom, keeping his business afloat with all employees, while Tom makes money. (Specifically, let Tom use his brand for the soap, while focusing on dominating other parts of the market).
– How does it solve problem:
– Pros: Cheetan’s business stays open and he doesn’t have to lose any employees, Tom makes more money using Cheetan’s brand power, Cheetan maintains relationship with employees, Cheetan keep this family legacy alive.
– Cons: This solution may not be accepted by Tom or may still result in Cheetan needing to lay off employees in the future.
– Implication on relationships:
– Short term: best option for Cheetan’s relationship with employees since they keep job and stay employed by Cheetan. Tom and Cheetan start working together instead of against each other.
– Long term: If the deal is not as beneficial as expected, could hurt Tom’s and Cheetan’s relationship in the future.
– Implications on venture:
– Short term: Cheetan and Tom’s business stay afloat.
– Long term: If the deal is not successful, Cheetan’s business could still be forced to close.

3. Cheetan lays off employees as needed, but helps them find new jobs.
– How does it solve problem:
– Pros: All of Cheetah’s employees are able to continue providing for their families, Tom takes control of market and makes more money, Cheetan maintains relationships with employees.
– Cons: Cheetan loses business and the respect of some of his employees, Cheetan still has negative relationship with Tom
– Implication on relationships:
– Short term: Some of Cheetan’s may be mad about the transition
– Long term: When Cheetan helps his employees find new jobs, he will hopefully be able to rebuild their trust
– Implications on venture:
– Short term: Cheetan’s business gets smaller and Tom’s business thrives.
– Long term: Cheetan’s business may continue to suffer as Tom’s continue’s to grow.

Step 6: Select the best course of action
Option 2: Cheetan leverages his brand to make a mutually beneficial deal with Tom, keeping his business afloat with all employees, while Tom makes money. Although this is the riskiest option, it will grant potential for Cheetan to continue his business and keep all of his employees. Additionally, it is the only option which will help to build a positive relationship between Cheetan and Tom, which could be beneficial in the future to Cheetan, his employees, and his business.

Step 7: Sequence of actions to implement solution
1. Meet with Tom to negotiate
2. Explain and prove how using his brand for the soap will allow Tom to make more money
3. Negotiate with Tom to allow Cheetan to dominate other parts of the neem market
4. Cheetan keeps employees as his other neem products sell well
5. Tom makes more money off his Chetan-endorsed soap

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