Part 1: Ethical Decision-Making

Facts 

1. Neem, indigenous tree in idea, is sacred
2. Neem has been used for medicinal purposes, food production, toiletries, fuel, and pesticides 
3. Chetan operates a business of neem products and employs 60 people
4. Indigenous to india
5. Tom Johnson is the Director of Oregon Organic Pesticide Services (OOPS) 
6. Tom travelled to India on vacation and discovered the neem seeds’ use as a potent pesticide
7. Tom imported neem seeds to his factory in the USA and experimentation and developed a formula for an organic pesticide based on the seeds
8. Tom’s company invested $5 million to conduct extensive safety and performance tests over the next decade
9. Tom’s company got security clearances from the EPA
10. OOPS wants to set up a subsidiary business in the rapidly emerging market of India
11. He got a patent for the pesticide and made a profit of $12.5 million in a year
12. He can sell the product at a lower price than Chetan and reduce his business
13. Tom demands a royalty from Chetan

Ethical Issue: Is it ethical for Tom to put Chetan out of business, and charge him a royalty for using neem products, when the legal system in India is less developed than that in the United States and has less opportunity for securing intellectual property?

Stakeholders and Motivations

1. Chetan
   1. Successful business of neem tree products that produces pesticides, skin creams, contraceptives, lamp oil, and more
2. Environmental Protect Agency (EPA)
   1. Wants to ensure public health, safety and wellbeing
   2. Wants to ensure the environment is not at risk of destruction 
   3. No negative environmental consequences occur when pesticides are used
3. Oregon Organic Pesticide Services (OOPS)
   1. Wants people to buy the pesticide from him/make a profit
   2. Put a patent on the pesticide and wants it to be followed
   3. Want healthy, organic patents 
4. Tom
   1. Social impact
   2. Make money
   3. Tap into indian market
5. Indian cottage industries
   1. Want social mobility 
   2. Want their communities to be profitable/ have good business
6. Farmers 
   1. Want crops that are consistently producing good yields
7. Consumers
   1. Want a price that is lower cost or the same cost as before
   2. Want to support their friends/family in India who are making money through Chetan
8. Indian and US government 
   1. Want to improve local economy
   2. Responsibility to protect Indian business owners
   3. Secondary stakeholder

 

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. 

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, 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. 

Possible solutions

1. Start pushing the other products they manufacturer such as skin creams, contraceptives and lamp oil. 
   1. Ethical or principle code: virtue based thinking
   2. Pros
      1. won’t have to fire employees
      2. they will still have an income
      3. continue to produce profitable neem products
   3. Cons: 
      1. Still will lose market share because they are losing the pesticide
2. Chetan can suggest a merge with OOPS
   1. Ethical or principle code: consequence based thinking
   2. Pros: 
      1. Can still maintain Indian connection
      2. Can still make an income
      3. Can be considered CSR for OOPS
   3. Cons: 
      1. Chetan will not be able to function independently
      2. have to rely on OOPS for decision making 
      3. May have to lay off some employees
3. Find loopholes in the patent- alter formula to make it different from what is patented
   1. Ethical or principle code: consequence based thinking
   2. Pros: 
      1. Produce an environmentally friendly product that is similar to OOPS
      2. Will be able to still produce pesticides
      3. Won’t have to fire employees
      4. Will still have an income
   3. Cons: 
      1. Still cannot produce it as cheaply as OOPS
      2. Probably will still lose profit

Seek Additional Assistance

This link has an article which talks about core values and the three guiding principles. https://hbr.org/1996/09/values-in-tension-ethics-away-from-home

This link provides in depth information about intellectual property and copyright ethics. http://guweb2.gonzaga.edu/faculty/alfino/dossier/Papers/COPYRIGH.htm

 

Best Plan of Action
Solution 2: Suggest a merge with OOPS
It is in Chetan’s best interest to merge with OOPS in order to be successful. 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. Therefore Chetan should not rely on other products, as there is a large risk. 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. 

 

Implications 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

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

The problem:

Stakeholders and their motivations:

1. Chetan
   1. Personal: 
      1. protect his employees
      2. maintaining his 7 generation family business
      3. Stay safe
   2. Professional: 
      1. successful business
      2. make money
2. Tom/OOPS
   1. Personal and Professional
      1. expand OOPS
      2. stay on top of the Indian market
      3. make money
3. Chetan’s employees
   1. Personal: 
      1. Protect their families’ hard work
      2. Keep the reputation of the business
   2. Professional
      1. Want to make money

3 Alternative Solutions

1. Merge with OOPS and hire some of his local employees
   1. Pros: 
      1. Keeps some of his people employed
      2. OOPS will get Chetan’s loyal customers and make more money
      3. OOPS has a good reputation because it is an American business with personal ties in India
      4. Forces out some competiton
   2. Cons
      1. Chetan will lose some of the history of his company
      2. Probably cannot hire all of Chetan’s employees
   3. Saving face: Chetan saves face with the employees that he saves jobs for
   4. Implications of relationships:
      1. Short term: chetan’s employees may feel like they are being betrayed by chetan working with an American company, some people who are laid off will be angry
      2. Long term: eventually the employees who he keeps will get over there resentments because they are still making money
   5. Implications on venture:
      1. Short term: Chetan will be absorbed by OOPS
      2. Long term: The collaboration will have a larger market share, Chetan and local people will still be working for the company 
2. Dissolve the business and retire
   1. Pros:
      1. Doesn’t have to compete with OOPS
      2. Chetan still has money 
   2. Cons:
      1. Chetan’s employees will lose their jobs
         1. Lose their income
         2. Be angry
      2. Community will dislike Chetan
      3. The community will lose a long-standing business that is sacred to India
   3. Saving face: Chetan saves face with OOPS because he isn’t competing with him anymore
   4. Implications on relationships
      1. Short term: employees will dislike Chetan
      2. Long term: employees will still dislike Chetan, and the whole community maybe against him
   5. Implications on venture:
      1. Short term: OOPS does not have any competition
      2. Long term: OOPS may struggle because the whole community will be against them / not like them for the situation with Chetan 
3. Form a collaboration where OOPS produces and Chetan supplies
   1. Pros
      1. Take advantage of OOPS’ economies of scale
      2. Take advantage of Chetan’s local connection
      3. Employees can keep jobs
         1. Will be happy
      4. Chetan is not giving up all of his power
   2. Cons
      1. Due to the patent, OOPS has the power right now and will not do anything that will force them to give up some money
      2. Hard to prove that this will work
      3. People still may not like the connection to an American company
      4. The product may lose some of its local vibe / originality because OOPS is in charge of production
   3. Saving face: Chetan saves face with employees because they’ll keep their jobs, and saves face with OOPS because he will not be competing with them
   4. Implications on relationships
      1. Short term: good relationship with OOPS, employees might be unhappy that Chetan is partnering with an American company
      2. Long term: eventually employees will be glad that they still have jobs and that there was a solution
   5. Implications on venture:
      1. Short term: might be a little bit complicated
      2. Long term: will have economies of scale and close Indian connection with a lot of support

 

Additional Assistance

Indians might be upset with a foreign entity coming in and taking over, but if they are supported by locals, it might be easier for them to tolerate. We saw this in Sierra Leone when we used translators and World Hope International staff to put the community at ease. 

 

Best Solution
Solution 3: form a collaboration where OOPS produces and Chetan supplies

This is the best solution because OOPS will be able to use its American resources and have economies of scale. At the same time, Chetan will have the connections with the local Indians when supplying the neem products because he is Indian and has local employees. Everybody will be able to keep their jobs and Chetan will be saving face with all of his employees. He will also save face with OOPS because they are collaborating and OOPS is okay with this. This is better than solution 1, where they would merge, and Chetan would really be giving up his power. In this situation, he is still in charge of distribution, but unfortunately not production, so the product may lose some of what made it so special, like his grandfather’s face. Although people maybe unhappy with Chetan for collaborating with an American company, it is still better than solution 2 where nobody would have a job when he dissolved the company.

 

Solution Implementation

1. Create a deal with Tom from OOPS about production and distribution
   1. Figure out profit split
2. Explain to employees any changes in their roles
3. OOPS uses their resources and economies of scale to produce at the lowest cost
4. Chetan and employees distribute through local connections