GSIF Case Study #4

The case study we were presented with for this week was very complicated. There is a business owner named Chetan and he creates many products using a tree called Azadirchta indica, also known as Neem. The business has been in Chetan’s family for generations and has a lot of sentimental value. The business also provides jobs to some of the poorest people in that region of India. Although this business has been in the family for seven generations, not much technical knowledge is known about the tree, just how to make different products with it. It has many uses though, medicinal purposes, food production, toiletries, fuel, and pesticides. Ten years ago a man named Tom Johnson visited the area and discovered that the Neem tree seeds can be used to make a potent pesticide. He then brought this finding back to America and showed it to the group he is the director of, the Oregon Organic Pesticide Services (OOPS). He then got the worldwide patent for Neem pesticide products. OOPS now wants to charge Chetan’s business and many others like his that use the tree royalties for the Neem based pesticides that they all sell. They also want to expand their sales to the Indian market to undercut the prices of Chetan’s and many other business owner’s products. The ethical dilemma is whether or not it should be allowed that OOPS can charge people in India for things they have been using for thousands of years.¬†

The stakeholders in this situation all have professional and personal motivations. Chetan does not want to pay the royalties because that would hurt his business. He also does¬† not see the need since they have been using these products for a long time. He would also like to keep his family traditions alive. The employees do not want the company to pay royalties because that could cause job instability or even reduce their pay. Tom Johnson/OOPS want to make more money and expand their reach. They also do not want to make it seem like they can be pushed around by the smaller companies. The neem product users want the cheapest and most accessible product. They would also want to preserve the symbolic nature of a tree that has been considered sacred by both the muslim and hindu population of India. Chetan’s family would want to continue their revenue stream at the same pace and would like to keep the long time family owned business running.

There are multiple solutions to this problem but all have consequences. The first solution would be to do nothing. OOPS only has a patent on the pesticide products that the neem tree makes but neem has over 200 other uses. Instead of fighting a large company, Chetan could simply pivot to the other products. He could also put money towards patenting the rest of the products so that he will not end up in this situation again. The pros to this is that the business continues to run and hopefully they would be able to maintain a solid income and no employees would be fired. The cons of this plan is that the other products might not sell as well leaving a large gap in the income of the employees and Chetan. This could lead to layoffs or even closure. It would also show Chetan’s weakness and he would not be saving face.

The second solution is to fight the legality of the patent and the instilled regulations. Patent laws say that it is not possible to patent a naturally occurring product, just the process to make it or purify it. Chetan would be able to argue with courts to keep selling the products. The possible pros of this is that Chetan saves face and is able to continue selling his product with no regulation. The con to this is that he is arguing against a large company that probably has many lawyers that would fight against him. Losing this battle could also bring attention to the market and it could become saturated with outside companies taking all the business away from. Also, losing a public battle would lose his credibility.

The final solution would be to try and cooperate with OOPS so that the company stays in business. They could sell or lease products to the company for them to sell and he could keep the employees. The pros to this is that it creates a good bond with a big company and could increase sales. The cons is that he and his employees could still be out of a job if the deal goes wrong. It would also ruin his reputation because he is bowing to the outside company.

In my opinion, the best solution is to continue selling the other products and work to get the patent on them. It requires the least amount of money going towards arguments and can increase income around the world if other people want to sell these kinds of products. Obviously, sales could drop and problems could arise, but these are the same problems that occur in every scenario. This could hurt business in India though, because other companies might go under giving to a vacuum of the industry that OOPS might fill and grow to control that region.

The second part of this case study has more information. It is six months later and OOPS has expanded into the Indian market and is gaining a lot of wealth. Chetan will have to layoff half of his staff by the end of the month if he does not figure something out. Chetan has spoken to Tom Johnson asking him to pull out of the market but Tom refused but he is willing to collaborate as long as he gains more wealth. Some Chetan’s employees saw these talks and thing that Chetan is working with Tom so they became very angry and are threatening him. If the business went under, Chetan would be fine though because he comes from a relatively wealthy family. The dilemma in this situation is what should be done.

The stakeholders and their motivations are the same.

The solutions are collaborate with OOPS, offer severance to the employees, and sell the company to OOPS. If Chetan were to collaborate with OOPS, he might be able to negotiate a deal where the employees are able to keep their job. This could work because OOPS would then be able to expand into the Indian market much faster. This would hurt Chetan because he is losing the business and might not get a job. It would also mean that the generational business would be sold to a corporation.

The second solution is offer severance to the employees. This has some pros because the employees would not be as made and maybe will not attack him. Chetan would be able to save face a little bit and he would not lose the business that he has worked so hard for. If employees are unable to find a job, they might go work for OOPS and tell them all the ways to produce the other products.

The final solution that we came up with was to sell the company to OOPS and fire all the employees. Although this is a somewhat heartless option, it would make Chetan’s family more money. With the full sales of everything, Chetan would make a lot of money. The cons to this solutions are that Chetan’s employees would be extremely angry and might attack him. He could also get burned on the deal since he does not have higher education like the people at OOPS probably do.

Overall, the best option seems to be working with OOPS to help expand the market and saving the employees. The steps to do this would offer Tom Johnson ways to make money by showing him the other products that are bought often. That would show him that there is more money to be made and would most likely get him to sign a favorable deal that would keep the employees. Chetan could also make money off this deal because he would be able to profit off the sale if he is able to work it into the deal.

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