CINQ Blog Post #5: Neem Case Study

During the most recent case study our class looked at, we read about a United States company coming into India to make Neem products and in the process disrupting a generations long local company. Our team was presented two cases regarding this situation, and assessed them utilizing ethical decision making and grassroot diplomacy steps.

 

Aspects relevant to both cases:

Step 2: Stakeholders of the Situation(s) & Step 3: Motivation of Stakeholders

  • 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. Love u @ maria THX
  • 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 

CASE 1:

  1. Facts of the situation

Neem is a plant that is native to India, is viewed as sacred by many people in India, and has been used to make a variety of products for centuries. Currently the neem industry in India employs roughly 100,000 people, and one of the companies that deals with neem related products is run by Chatan, who has had this company in his family line for generations. Meanwhile, Tom Johnson, the director of Oregon Organic Pesticide Services (OOPS), has realized the potential of the neem industry, and has taken the steps to put their successful neem-based product in India, where they can sell for a cheaper price than what Chatan can offer. Additionally, the patent allows for Tom Johnson to enforce royalties on Chetan and other companies like his.

2: Refer to “Aspects Relevant to Both Cases”

3: Refer to “Aspects Relevant to Both Cases”

4: Forming Alternate Solutions

This situation is not so much revolved around ethics and morality, but more about legality since a patent is involved. Therefore, this leaves few options on how to deal with the situation.

  • Chetan can go about the situation in the legal manner that is presented, and pay the royalties as he is legally required to do so. The pros of this option is that even though Chetan is losing money, he will not get caught up in any legal trouble, and Tom Johnson receives the money that he is entitled to with the patent. However, these royalties could put Chetan and many companies like his out of business. 
  • Chetan could fight the patent. We discussed in class that an organic element, such as neem, could not be patented in many cases. With this in mind, Chetan could challenge the validity of the patent Tom Johnson has. This challenge could be successful and the patent could be rescinded, but if it is not then Chetan would have wasted all this effort to still have to pay royalties.
  • Chetan could take his neem related products out of his companies mix. Chetan’s business carries many different products, and although taking neem products out would impact his business, he would no longer have to pay royalties.

5: Seek additional assistance

With a patent, companies like Tom Johnson are entitled to enforce royalties, and therefore if Chetan doesn’t pay, Johnson’s company could target them. Additionally, the likelihood of a small business (Chetan’s) effectively challenging a patent to the point of it getting removed is low.

6: Choose best course of action

Chetan would have to analyze the costs associated with paying the royalties compared to removing neem products from the mix. If it is found that paying the royalties would be less of a negative impact than removing neem products, then Chetan’s company should just pay the royalties on the neem based products. If removing the neem products is less costly than paying the royalties, Chetan should do that. 

7: Implications of choice

If Chetan decides to pay the royalties, then those royalties could continue to add up and kill Chetan’s business, even though he sells many products that would not warrant a royalty to OOPS. Removing neem based products from his mix could hurt his business worse, however. Although Chetan would have to pay royalties on his neem products, he would still be making some sort of profit on it, so removing those products completely removes those profits. However, if Chetan’s other product lines are productive enough to the point that the removal of the neem products doesn’t impact them too much, then they would benefit greatly by not having to pay royalties. 

 

CASE 2:

  1. Facts of the situation

Tom Johnson implemented his neem based product into the Indian market, where it is wildly successful. Chetan had approached Johnson about OOPS leaving the market, and although Johnson had refused to leave, he was open for a collaboration between Chetan’s and his businesses. Johnson staying in the market means that Chetan will have to lay off many of his workers. Although Chetan will be well off financially, he feels sorry for having to lay off the workers, and to make matters worse, the employees believe Chatan hs been working in collaboration with Johnson and see him as a traitor.

2: Refer to “Aspects Relevant to Both Cases”

3: Refer to “Aspects Relevant to Both Cases”

4: Forming Alternate Solutions

  • Chetan retires and offers his workers letters of recommendation for other jobs. Chetan is at the point in his career where he could comfortably retire, s him retiring would mean he takes himself off out of the whole conflict. However, this probably would not do anything in terms of changing the workers newly formed attitude about Chetan.
  • Chetan cuts 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. This would be beneficial for both Chetan and Tom Johnson, as Tom Johnson will be using a brand image that has been present in the Indian market for generations, and Chetan receives compensation and could probably retire peacefully while his employees receive new jobs. However, it may be hard for Chetan to just give up the family business.
  • Chetan does nothing and continues to run his business in the hopes that they can still be effective in the market. Although this allows Chetan’s company to remain independent, Tom Johnson’s company could run Chetan’s company out of business.

5: Seek additional assistance

It seems as though that the way Tom Johnson’s business is growing, there is no way Chetan would be able to effectively run his business in a way that will continue. 

6: Choose best course of action

Chetan should form a sort of collaboration where Tom Johnson will use Chetan’s company’s brand to maintain a reputation in the marketplace, while Chetan could retire while his employees receive new jobs working under Tom Johnson. 

7: Implications of choice

Chetan will receive compensation for giving over his brand image to Tom Johnson, and he will be able to retire peacefully. However, this will only allow Tom Johnson’s company to grow larger, which means other companies similar to Chetan’s would be driven out also. Although Chetan would benefit, other business owners like him will not.

 

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