Case Study 4: OOPs and Chetan

Case 1: Ethical Decision Making 

1: Facts of situation:

  • The 14 million trees in India have been used extensively over the past 2,000 years for medicinal purposes, food production, toiletries, fuel, and pesticides
  • Azadirachta indica (Neem) a tree indigenous to India
  • Neem is sacred
  • Neem is used for medical purposes, food production, toiletries, fuel, and pesticides
  • India employes about 100k people and used in pesticide industry
  • Pesticides are used widely across India
  • Chetan lives in Agra, India and operates a small business of neem tree products
  • including pesticides, skin creams, contraceptives, lamp oil and many other products
  • Family owned biz Chetan has HS education
  • Chetan employs 60 people
  • Does quality control reference 
  • Chetan does not know the exact name of the neem seed extract, Azadirachtin
  • Has cultural knowledge but not a lot of knowledge in the science end
  • Tom Johnson is developing neem seed pesticides (affiliated with OOPS)
  • Johnson’s co invested 5mil to conduct safety and performance tests over last decade
  • Tom’s company has certification (patent) through the EPA to sell pesticides (worldwide patent)
  • Tom has made profit of 12.5 million during his first year
  • OOPS wants to set up biz in India
  • Economy of scale at play bc OOPS selling all over world and will likely put Chetan out of business
  • OOPS is demanding a royalty from Chetan’s business and other small industries that make neem-based insecticides

Problem

What rights does Chetan have and is it ethical for the US company to uphold their patent rights? 

Stakeholders and Motivations

  • Chetan
    • Professional: Chetan wants to maintain his business without the royalties charged by OOPS ruining his venture
    • Wants to see his families generation long venture continue
    • Personal: Can be assumed that Chetan would struggle supporting his family members if his co. collapses bc royalties
  • OOPS
    • Prof: They want the business to work in India. 
    • Personal: they want to provide effective organic solutions to pesticides so people do not get sick and that they can protect the patent 
  • Tom Johnson
    • Prof: Tom wants money and he wants his business to be successful. He wants to tap into the market in India 
    • Personal: He might want to give back.. I.e. help Indians
  • Chetan’s Family
    • Prof: not really
    • Personal: Wants to see the business grow. Distrust for westerners. They know the market very well. They hold the plant sacred and might be sus of the westerners. 
  • Chetan’s employees (60+)
    • Personal: Want to keep their jobs to provide for their families. Same distrust of western influence as Chetan’s family. 
    • Professional: Want a stable job that gives them income. 
  • OOPS investors
    • Personal: n/a
    • Professional: Want the company to be as successful and profitable as possible. Also want the company to act ethically so that there are no scandals. 
  • Other small Indian ventures that will have to pay royalties
    • These ventures will be charged royalty by OOPS on products that are tied to their patent. This would negatively impact their ventured greatly and may put them out of business
  • Indian People
    • Personal: want the product to stay the same price or go down 

Alternate Solutions 

  1. Legal way (Patent binding)
    1. Tom obtained the patent so Chetan has no option but to pay the royalty
      1. Pros: Tom makes a lot of money and he is successful 
      2. Cons: Tom puts people out of business and he is disliked by many causing his business to fail. Chetan is run out of business. 
  2. Something in between: Tom Johnson and OOPS understand that entering the Indian market and collecting royalties from Chetan’s business will put Chetan out of business. To compromise, OOPS hires Chetan and his employees for a standard working wage. OR OOPS buys Chetan’s company
    1. Pros: Chetan and his employees already know how to make neem based products, Chetan also already has a following (loyal customers) Chetan and his employees retain a job. 
    2. Cons: Wages under OOPS might not be the same as the wages Chetan and his employees were making independently. The change in oversight might be hard to adjust to and Chetan’s past employees may take their frustrations out on him. 
  1. “Moral Way”
    1. Tom does not make Chetan or any other neem company pay a royalty to use neem in their products
      1. Pros: Smaller neem companies are able to stay in business, Tom will be in good standing with the other neem company and will be in a position where he can possibly partner/ask favors from them. 
      2. Cons: Tom will not be earning the money from his hard earned patent, OOPS could be run out of business by the local businesses.  

Best Course of Action

The best course of action would be something in between, number 2. It is not in Toms best interest to follow through with solution 1 or 2. If Toms goes with solution 1 or 2 there is a good chance OOPs will be run out of business. For option 1, Tom would have to go through a legal battle to ensure neem businesses are paying their royalty, Tom and OOPs will be receiving a lot of bad PR which can turn the loyal neem customer base against OOPs. While Tom is trying to make more by having businesses pay the royalty he will still end up going out of business because no one will want to buy OOPs products. For option 2, Tom is “giving up too many of his cards”. Tom has the upper hand by having a patent and the ability/infrastructure to make companies pay the royalties by caving and asking for nothing he is taking a big risk. The royalties might be the only thing that holds OOPs together; Tom can not insure the loyal neem customers will leave their regular providers to buy from OOPs. In order to take the less risk and predict the best outcome it is safest for Tom to make a deal with Chetan; to pitch to him (Chetan) that he should sell or come work for OOPS and that all of his long lasting employees also have a new home with OOPs. Tom will make the argument that if he enforces Chetan to pay the royalties he will be run out of business so in order to carry on his legacy and ensure his employees have jobs Chetan and OOPs should partner up. This is the best course of action for Tom however this might not be the best option for Chetan. The change in oversight and not having control over the process would be a hard adjustment for Chetan. Not running the business might also be a big issue and could be a loss in the family’s eyes and might even be worse than just selling the company. However, the argument for Chetan can also be turned the other way, it might be a better idea to have any type of legacy carry on than none. Finally, I do not believe this is an ethical decision making case study. I think it is a decision that is completely based around the possible business implementations. 

Implications

A number of the implications are talked about in the solutions, and are used as reasons not to/to follow that solution. The main implication that both OPPs and Chetan are trying to avoid is being run out of business. Worst case scenario, Chetan partners/joins/sells to OPPs in order to save his business and employees however, OOPS still runs out of business because customers do not like the idea of buying from a foreign company, they want to buy from a locally run neem company.   

Case 2: Grassroots Diplomacy

The Facts 

  • OOPS launched 6 months ago, crushing market
  • 20 different products
  • neem based soap – most successful 
  • OOPS wrapper features a photo of Tom Johnson
  • Chetans wrapper features a photo of the founders great grandfather
  • Chetan has tried to convince Tom to leave the market or collab
  • Tom will not leave market 
  • Tom is open to collaboration if it will make him money
  • Chetans business if suffering will have to lay of half his staff
  • Employees and families have worked with him for centuries
  • Chetan will not suffer as much from declining business because of his investments
  • Chetan s employees know he met with Tom 
  • Believe Chetan has cut a deal with Tom/OOPS
  • Employees feel cheated and abandon 
  • Some employees have resigned to their fate
  • Some are confident Chetan will find a way out 
  • Some want to physically want to beat Chetan up 

Problem:

OPPS is dominating the neem product industry and small business owners like Chetan and his employees are in danger of going bankrupt and want OPPS to leave the market or collaborate. 

Stakeholders and Motivations: 

  1. OOPS
    1. Personal/professional: Want to keep business growing and keep control over the market 
  2. Tom
    1. Personal: Wants to be the top dog, wants Chetan to pay the royalty 
    2. Professional: Want OOPS to grow bigger and make more money. Provide neem products for indians. 
  3. Chetan
    1. Personal: Family legacy is on the stake. Employees are friends (assumption because they are long term employees) and he doesn’t want to seem like a bad friend by betraying them. 
    2. Professional: Don’t want to go out of business and don’t want to lay off their long term loyal employees.
  4. Chetan’s family
    1. Personal: Don’t want to lose the family legacy. They’d feel sad if they have to fire employees who are also their friends. Don’t want to feel financially unstable when invested money later decreases too low. 
  5. Chetan’s employees
    1. Personal: They’re long term employees and so are their relatives so it’s a personal business to them. 
    2. Professional: They need the money to make a living so they can’t be fired. 
  6. Employees’ family
    1. Personal/professional: They need their breadwinners to make money to provide at home otherwise they could starve and die. 
  7. Neem customers
    1. Personal: Desire to get neem products at the cheapest price. Want the neem products they trust/have loyalty too. 
  8. Other small neem product businesses
    1. Personal: Keep their employees’ jobs.
    2. Professional: Continue making money/grow profits
  9. Neem growers/gardeners 
    1. Personal/professional: Want to make money selling neem.

Alternate Solutions

  • Solution 1: Chetan leaves his business and negotiates with Tom to find jobs for his employees at OOPS
  • • How does it solve the problem?
    • o Pros: Chetan’s employees have jobs, OOPs no longer has Chetan as a competitor, OOPs could possibly gain Chetan’s customers if they hire his employees
    • o Cons: Chetans family business dies, Chetan/his future family may have to find work somewhere else in the future (even though he is well off now) 
  • • How does it save face of those involved?
    • Chetan will be able to say that he went out with the upper hand because he got his employees jobs. 
  • • Implications on relationships
    • o Short-term: Chetans employees feel resentment toward Chetan because he bailed on the company but they are grateful because he found them new jobs. 
    • o Long-term: Cheten and his family could lose their connections and respect within the community because they no longer have the long lasting family business (something to define them) 
  • • Implications on the venture (OOPs)
    • o Short-term: Might be a learning curve, gaining and training all the new employees. Transition of the new employees might cause some tension. 
    • o Long-term: OOPs makes more money ,is more successfully, moves on to phasing out other neem businesses
  • Solution 2: Cut a deal with Tom to use Chetans’ business’ image and brand name to further penetrate the Indian market, Chetan receives compensation from this deal (for using his brand) and his employees receive jobs.
  • • How does it solve the problem?
    • o Pros: Chetan gets to continue employing his workers, and his family’s legacy will continue on. 
    • o Cons: Will likely have to surrender business capital and/or oversight. Chetan won’t have much of a say in how the business is run. 
  • • How does it save face of those involved?
    • Chetan will be able to continue employing the same families and continue to generate a profit. Tom will grow his business and profit margin.
  • • Implications on relationships
    • o Short-term: Chetan will maintain his relationship with his employees and generate a relationship with Tom and OOPS
    • o Long-term: Chetan’s relationship with his employees may remain strong, but as his business and Tom’s continue to dominate the market, there could be increased tensions with other Indian Neem businesses and their employees.
  • • Implications on the venture
    • o Short-term: No layoffs will occur, management will likely change
    • o Long-term: The employees’ jobs will be safe, the overall business structure will be permanently altered, they will edge out other small Neem businesses
  • Solution 3: Chetan and Tom do nothing. Chetan will help his employees find jobs elsewhere (letters of rec). 
  • • How does it solve the problem? 
    • o Pros: It eliminates the tension between Tom and Chetan. Chetan’s employees can find new jobs and provide for their families. At least some of employees will remain employed 
    • o Cons: Chetan’s legacy dies. There is no guarantee that his past employees will find new jobs in a timely manner. Customers may feel betrayed and may have a bad lasting impression of Chetan. 
  • • How does it save face of those involved?
    • Chetan can confidently say that he never gave in to the forign company. 
  • • Implications on relationships
    • o Short-term: Chetans employees feel resentment toward Chetan because he bailed on the company but they are grateful because he is helping them find new jobs/writing letters of rec. 
    • o Long-term: Cheten and his family could lose their connections and respect within the community because they no longer have the long lasting family business (something to define them) 
  • • Implications on the venture
    • o Short-term: Chetan’s business ends, Chetan’s customers feel like they have been betrayed because they can no longer buy from their favorite neem business 
    • o Long-term: Chetan and his family will not have enough money to carry on with what they had left over from the business. Chetan’s customers will eventually transition over to OPPs, OPPs will gain more customers and will become more successful 

Best Course of Action

Chetans best course of action would be, solution 2, to cut a deal with OPPs that benefits the employees and Chetan. Solution 1 and 3 are not viable because Chetan does leave the market with anything to show from it. These two solutions are also unfavorable for the employees because for solution 3 they are not guaranteed a job and solution 1 they are going to work for OPPs without their long time boss, Chetan. Solution 2 is optimal because Chetan is still carrying out his legacy, by letting OPPs use his branding (his great-grandfather’s face) and bonus he will be receiving a steady compensation for it. Chetans employees receive jobs and still feel like they are working for the family business because it is their (Chetans) branded product they are still providing with OPPs. And finally OPPs will also benefit from this deal for they are receiving the rights to the branding that is holding them back from taking over the entire market. OPPs will be gaining a large number of customers with this deal and ultimately money. They are also avoiding bad PR by partnering with Chetan instead of just running him out of the market.

Steps to Implement Best Course of Action

  1. Chetan and Tom/OPPs will meet in private and will discuss Chetan’s plan (to give up his branding, receive compensation, employees plan). 
  2. Once Tom/OPPs has agreed to the plan, specifies will be worked out/discussed, type of branding OPPs can use, how much Chetan will be receiving as compensation, wages and positions for employees. 
  3. An announcement will be made that Chetan and Tom/OPPs are partnering and the plan for employee integration. 
  4. Chetan employees will be phased in to work at OPPs after Chetan’s business officially closes. 
  5. Chetan will start receiving compensation for the branding, Chetan’s employees will be receiving consistent work, OPPs will be more successful on the market. 

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