Part 1: Ethical Decision-Making
Step 1: The facts in the situation
- Neem is a sacred, indigenous tree to India
- 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
- 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 developed a formula for an organic pesticide from the seeds
- 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 and got a patent for the pesticide. He made a profit of $12.5 million in a year.
- OOPS, Tom’s company can sell the products at a lower price than Chetan, and people are likely to prefer products from American companies than Indian companies
- Tom demands a royalty from Chetan as a result of his patent.
Step 2: The problem and the Stakeholders
What rights does Chetan have and is it ethical for the US company to uphold their patent rights?
- Chetan
- Oregon Organic Pesticide Services (OOPS)
- Tom
- EPA
- Consumers
- Farmers
- Market
- Indian Government
Step 3: Assess the motivations of the Stakeholders
- Chetan
- Successful business of neem tree products that produces pesticides, skin creams, contraceptives, lamp oil, and more
- Be loyal to customers and employees
- Oregon Organic Pesticide Services (OOPS)
- Want people to buy the pesticide from them and make a profit
- Put and patent on the pesticide and want it to be adhered to
- Want healthy, organic pesticides
- Tom
- Social impact
- Make money
- Tap into the neem market in India
- EPA- Environmental Protection Agency
- Ensure public health, safety, and well-being
- Avoid environmental consequences from the use of pesticides
- Consumers
- Want to be able to purchase neem products for the same cost or a lower cost with the same benefits
- Want to support either themselves, their friends, or family who are working for Chetan
- Farmers
- Want crops that have good harvest
- Want to use pesticides that do not harm their products or their customers
- Indian government
- Improve the local economy
- Protect Indian business owners
- Preserve the use neem trees
Step 4: Alternative Solutions
- OOPS does enters the market and edge out neem businesses
Ethical principle: Consequence based- OOPS profits
-
- Pros
- Prices for neem based products decrease
- OOPS profits
- Cons
- Bad for small businesses
- Loss of employment
- Pros
- OOPS and Chetan agree OOPS enters market, no royalty paid
Virtue-based – OOPS believes removing hundreds of employees and shutting down businesses is ethically wrong, so does not do it.
-
- Pros
- Chetan’s company still profits
- Cons
- Loss of profit for OOPS
- Sets bad precedent not to uphold patents
- Pros
- OOPS buys Chetan’s company
consequence-based solution because if Tom just wants to get his business running
-
- Pros
- Company already knows how to make products
- Employees keep their jobs
- Cons
- Wages may not be as good
- Won’t have as much freedom as they did
- Pros
Step 5: Additional assistance
Step 6: The best course of action
I think solution 1 is the best course of action, because it is unfortunately the reality when a patent exists. Realistically, economies of scale would work in OOPS’ favor with or without royalty payments.
Part 2: Grassroots Diplomacy
Step 1: The facts in the situation
- Same as part 1, but 6 months later
- Market is booming, 20 products sold at supermarkets
- Neem based soap is best product
- The wrapper of soap has tom on it, Chetan has his grandfather on soap wrapper
- Chetan met with tom multiple times urge him to move out of the market
- Tom refused to move out but would collaborate
- Chetan business is suffering, will likely have to lay off at least half of workers
- Chetan is financially well off and will do fine if the company shuts down, but doesn’t want to lay off employees
- His employees think he cut a deal with OOPS and feel cheated by Chetan
Step 2: The problem and the stakeholders
The problem is how Chetan should proceed in this case. He will be fine if OOPS completely removes them from the market, but his employees will not be.
- Chetan
- Tom/OOPS
- Chetan’s Employees
- Other growers of neem trees
Step 3: Their motivations
- Chetan
- Personal
- Continue to make money
- Maintain his successful family business of seven generations
- Professional
- Protect his employees’ jobs and livelihood
- Successful business and products
- Personal
- Tom/OOPS
- Personal
- Make money off the neem products
- Professional
- Expand OOPS’s business
- Stay on top of the Indian market
- Continue to make successful neem products
- Personal
- Chetan’s employees
- Personal
- Loyalty to Chetan and his family business
- Continue the legacy and reputation that the business has earned over the past few decades
- Professional
- Make money and support their families
- Personal
- Other growers of neem Trees
- Personal
- Feeding families
- Professional
- Job security
- Personal
Step 4: Alternative solutions
Chetan finds a way for his employees to work for Tom at OOPS
- Pros
- Employees still have jobs
- Cons
- Chetan is out of business, ending the family legacy
- This saves face for Tom as he is not taking away jobs, and Chetan for taking care of his employees and making sure they still have jobs
- Implications on relationships
- Short-term
- Probably won’t have a great relationship because the legacy is over but Chetan will be thankful his employees have jobs
- Long-term
- Any animosity is likely to fade with time.
- Short-term
- Implications on venture
- Short-term
- It will be a financial burden to give proper salaries to all of Chetan’s employees
- Long-term
- If business continues on the track it’s on, everything will be fine in the long term for the venture
- Short-term
Negotiate a partnership with OOPS in which both companies continue to operate
- Pros
- Both companies keep running
- Most employees can be kept
- Cons
- Profit decreases
- Some employees will likely still have to be laid off
- Other employees who aren’t will likely have decreased wages
- This saves face for the legend of Chetan’s business because it can keep running, and Tom can feel better knowing he didn’t put as many employees out of work
- Implications on relationships
- Short-term
- Those who least their jobs will be upset, as will anyone who may take a decrease in pay in this process
- Long-term
- Will probably have a positive long-term relationship as both companies are still in business, although it is less profitable
- Short-term
- Implications on venture
- Short-term
- Cash flow back in
- Keep most/employees
- Low morale for those who were laid off
- Long-term
- If successful, this arrangement may work for other producers of Neem products
- Short-term
Convince OOPS to buyout Chetan’s company
- Pros
- OOPS makes money
- Employees are likely to maintain jobs
- Cons
- Unlikely unless Chetan sells at a deal
- No guarantee of job security
- No guarantee of what the company will do.
- It saves face for Chetan by allowing him to exit easily. It also lets people keep their jobs theoretically.
- Implications on relationships
- Short-term
- Might be considered a coward
- A buyout can be bad for morale.
- Long-term
- People might have a chance to keep jobs long term
- Short-term
- Implications on the venture
- Short-term
- May allow for cash flow to start back in, which would allow people to keep their jobs
- Long-term
- May keep the business long term or could be sold
- Short-term
Step 5: Additional assistance
Implications of Closing Businesses
Step 6: The best course of action
Solution 3 (getting the company bought) is the best course of action because quite frankly either way it is likely to shut down. Realistically there is no way to maintain all jobs because the Neem Market is too saturated. In this scenario, Chetan can use the company as leverage and hope to do the best for his employees, knowing he and his family will still be okay financially. He may even be able to maintain the legacy of his grandfather in this process, although it will no longer be a family owned legacy.
Step 7: Actions to implement your solution
- Meet with TOM to discuss this idea in detail
- Use all leverage points Chetan has
- Try to maximize the benefit for as many of his current employees, even if OOPS doesn’t buy them out