A Case Study on Business Ethics & Intercultural management

Executive Summary

The case we are going to discuss in this paper represents issues which are related to business ethics and cultural aspects of countries. Here is a company named BVVB AG who is trying to get approvals for its two drugs which are being developed for the treatment for tick-borne encephalitis and leprosy. They are in crunch financial situation and will get closed down if the drugs don’t get the clearance in a year and half for only then, they will be able to earn profit out of them.

The problem they are facing is that in order to get the clearance for the drugs, they first should have a clinical trial. For this, they have collaborated with a US-based firm CRE which will perform these tests in the slums of Calcutta, India. Many media houses in India have got this report and now they are aggressively pursuing this story. One NGO named Panjaa is also opposing their inhuman approach of doing the business.

The company in response to such agitations has sent a product manager to calm out the scenario. He has been given a disposable amount as well as an ultimatum regarding to his getting fired if he won’t be able to take control of this situation.The product manager now has a huge responsibility on his soldiers. He has to save the face of his company. At the same time, he has some moral obligations regarding the side-effects the vaccines carry and the aftermath following these disastrous situations.

This paper discusses several moral standards and intercultural management concepts in order to carry out the inspection of this case and hopefully serves the purpose in best possible manner.

An Overview of Essential Moral Standards, Norms and Ethical Concepts

Moral standards and norms justly put the foundation for right actions for a human-being. Moral standards generally comprises of ethical norms, values and codes of conduct. All these things actually look like the same but they do differ. Moral norms can be defined as general rules like ‘Never tell a lie’ while moral values can be described as statements which point towards an object or its features like ‘Honesty is the best policy’. Codes of conducts are the rules by which an organization or a person abides itself in order to operate lawfully in the environment[1].As far as this case is concerned, we can see that the person in-charge here is trapped in a moral dilemma. At one hand, he has to get these tests done successfully in order to retain his job and fulfill his organization duties, on the other hand though, he knows that the implications of these drug tests could be severe for the patients and thus his moral obligations are stopping him from acting in such an inhuman way. Moral norms in this case suggest that these drug tests shouldn’t be performed if there are serious implications for patients attached with them. Business operations could be very emotionless at times and this case throws light on the banal aspects of business. The organization, BVVB AG, in this case hasn’t inspected the human-interests involved in this case and only trying to commercialize this cruel operation to garner maximum profits possible.

This case is a prime example of corporate treachery where sheer lack of moral values and standards demonstrate the unrealistic and savage aspects of a business. Every corporate house must abide itself with some sort of rules and regulations to show its accountability to society and stakeholders. They must follow an ethical framework- be it deontological, teleological or discourse-consensus. In this case, however, I’ll simply lobby for a discourse and consensus moral framework as this framework establishes the moral standards and norms through a discourse in which all the employees participate and cast their opinions. This framework takes into account all the arguments and evaluates them in order to finally establish a well-tuned ethical framework for business operations. This framework clearly favors the good reasons above bad ones and provides a procedural guide for employees for developing justifiable actions. As anyone can argue about the time-constraints attached with this model but in order to develop an ideal and morale-boosting business framework, whole-hearted dedication and approach is very necessary[2].

In our present case, BVVB AG should let everyone know about the complexities of its nature of business and take down everyone’s opinion whether they should go for such fatal drug-tests. Only then, they can justify their approach for commercial persuasion.

A Discussion on Different Economic Ethics Concepts

Modern business ethics concepts could be categorized in four principal ways-

a) Charitable business ethics– This concept wholeheartedly approaches profit maximization as its main goal of doing the business. This concept gives profit maximization topmost priority and advocates for ethical causes once the prime objective get fulfilled by the organization. For such businesses, large profit is very much essential for doing any good to society and if they won’t be able to generate any extra-profit, they will ignore the society as well as ethical quality of their business operations.

b) Integrative business ethics – Economics should serve as a life-serving study and it shouldn’t dictate the business operations is what this ethical concept proposes. Ethics should be given topmost priority and every concern of stakeholders must be addressed. Tasks must be distributed equally and operations must be run under regulatory norms and standards[3].

c) Corrective business ethics – This model calls for a consensus in order to create a business ethical framework in which moral guidelines will be well-defined. This model proclaims that ethical causes also carry some cost towards the organization and profit-seeking operations should be in tune with the ethical operations. If the profits are going overboard and more than enough, then a voluntary limitation could be imposed on such operations for concentrating on moral causes. All the business processes and profits will be taken care of legitimately and in reckoning with the stakeholders[4].

d) Functional/instrumental business ethics – This framework illustrates that companies profit-gaining operations are allowed only if they commit to make an ethical framework for the goods of society and the business. This model advocates for moral ethics as a operating tool for the business and directs a business to use these ethical causes to earn goodwill and long-term profit from the market[5].

In this case, however, BVVB AG is currently running their operations on the basis of charitable economic ethics concept where they are only concentrating on profit making instead of checking out the implications of their devastating actions. They should at least change their economic ethics concept to corrective business or functional ethics if not integrative business ethics so that they can earn profit as well as reputation for their ethical operations.

RADAR Concept

The RADAR logic is a powerful management tool for analyzing an organization’s performance by employing a structured approach. When the importance of a matter in-hand is very high, this dynamic assessment framework states that an organization needs to-

1. set out the result it’s working on to achieve

2. create and design a set of approaches to gain these results both in present and the future

3. distribute the resources in a sound way for perfect implementation of approaches

4. evaluate and elaborate the approaches based on the monitoring and analysis of results achieved[6].

There are five aspects of RADAR concept which are as follows:

a) Recognize

b) Assess

c) Decide

d) Act

e) Resolve

We will inspect all these aspects of RADAR concept on-by-one in the context of our case.

a) Recognize – It is evident from this case that an ethical component is missing here which is the ignorance of plight of those patients by BVVB AG who will carry-out the ill-effects of these drug-tests throughout their life. Company, however, can provide medical benefit to all these patients but this point is clearly missing from their agenda (not mentioned in the case). So we can definitely say that BVVB AG is only pursuing its commercial interest and overlooking the human-aspects of this case[7].

b) Assess – An assessment of the actions of BVVB AG shows that a lot of its key stakeholders – be it external or internal, for e.g., customers, general public, suppliers, government (external) and stockholders, employees and managers (internal) will get benefitted by these drug-tests. The main area of concern is the well-being of those 20% cases in leprosy and 0.1% in tick-borne encephalitis that will bear the brunt of the side-effects of these vaccines. The drug-tests will be conducted over 1000 people which are a small number as compared to the amount of people who will be having these medicines once they get approval. The number of beneficiaries of these vaccines will clearly outshine the no. of those unfortunates who will be enduring their side-effects. As these patients too are the stakeholders of the firm, the company only is responsible for their well-being. It is BVVB AG’s duty to provide medical relief to these patients[8].

c) Decision – In this case, as the company has already sent its product manager to Calcutta to make sure that drug tests be carried out without any hassle, it is very much possible that company will face mishaps and possibly judiciary actions taken against it. So this decision couldn’t get reversed. What they can certainly do is to provide these patients with compensation and free medical services if they experience side-effects of the vaccines as it has been mentioned in the case that ill-effects could be taken care of. They can, in this way, can create an example for the rest of the pharmaceutical companies of how they have handled an important case with such seriousness and noble approach.

d) Act – BVVB AG should carry out the above discussed disaster management practices with utmost dedication, conviction and courage. They should make sure that minimum people will get affected by their drug-tests and if they somehow, company should provide them with all the medical benefits and compensation[9].

e) Resolve – BVVB AG should resolve this issue delicately in a humane way as this matter contains emotions and the lives of several underprivileged Indians who have got no-access to medical benefits and they have no other ways to fulfill their basic requirements but to go under these life-threatening drug-tests. Periodic evaluations regarding their health-activities must be carried out post drug-tests in order to check the ill-effects of the drugs on their bodies[10]. BVVB AG should also make sure that they do not have to face such a dilemma in the future. They should focus more and more on CSR activities in order to gain reputation from the society.

The Important Core Elements Regarding Business Activity in India

Indians are known to be very idealistic in their nature and less manipulative. Same nature gets applied to business activities too. They won’t let anyone do anything wrong with their natives on their motherland. So convincing Indians is a tough task and you need to be pretty manipulative in order to do so. As a product manager and being a representative of my company, first of all, I’ll try to navigate all the negative publicity by issuing a press release on behalf of my company. Also since the successful drug tests are very necessary for the future of my company as it will ensure refinancing, I’ll urge CRE Ltd. (Clinical Research Enterprise Limited) to leave aside the negative media reports and carry out the tests as quickly as possible. Not to hurt Indian sentiments anymore, I’ll also try to carve-out a compensation plan for those prospective patients those are most likely to experience the side-effects of the vaccines and convince my senior management to work on this plan.

The most important core elements for preparing me for this business activity could be –

1. Intercultural differences – As India is still a developing country,           an employee from a developed country can experience quite a cultural shock in India as India is such a vast country, having so many people with so many dialects with cultural values and idealism deeply affixed in their roots.

2. Stringent legal framework – India is known for its very complex and rigid legal societies. So getting a bill passed or winning a lawsuit is a very tough task. Since my company could get into law trouble in this case, I’ll do my best to save my company all these troubles the Indian Legal System can cause.

3. Indian Media – As India is known in the western world as an IT giant, the technological revolution and information boom has helped Indian media scene to evolve itself to a level which was inconceivable a decade ago. In the process, these media houses have also become pretty hostile and do not generally let go any news skip their eyelids. Since my company is already in trouble with them because of the news of proposed drug tests on the poor people of Calcutta, I’ll have to make them believe that whatever we are doing is for the benefits of society and authorized under the legal framework of India.

A Theoretical Analysis on Different Cultural Concepts

Geert Hofstede carried out an experiment on 64 national subsidiaries of IBM to have knowledge about the various cultures and developed his cultural concepts based on 5 key indicators of cultural differences which are as follows:

(Source: 12manage 2012)

a) Power Distance – It is an indicator which shows the perception of an individual form a lower level of organizational hierarchy regarding the power distribution between various organizational hierarchy levels. The power distance index is always defined from below, not from above and describes the unequal distribution of power between international societies as anyone having some sort of international exposure knows that inequality persists in every society, some places more, some places less[11].

b) Individualism v/s collectivism – Individualism is an indicator which describes the position of an individual in a group whether it is strong or loose. Such societies showing signs of individualism are less cohesive in their relationship with each other and loyalty & accountability remain debatable topics there. They emphasize upon taking care of him/her, rather than of each-other. Collectivism, on the other hand, shows unquestionable loyalty between relationships and societies inhibiting this characteristic are emotionally very mature. The group-members remain close even after dissociation of the group. Joint-families could be an excellent example of collectivism. Children in such societies learn to think in terms of ‘we’ rather than ‘I’ of individualistic societies.c) Masculinity v/s femininity – Masculinity is an indicator which defines two aspects of a society- first, the role of the women in that particular group or society and second is the assertiveness the group members of a group show in comparison with the other one. Characteristics like modest, caring shows the feminism a group holds in its behavior while assertiveness and competitiveness are the characteristics of a masculine society. The women of a masculine society are normally less caring, tender, emotional and modest as compared to the women of a feminist society[12].

d) Uncertainty avoidance – Uncertainty avoidance index describes a pattern related to a society’s behavior in an uncertain and ambiguous environment in comparison with the other one. There are countries or societies for that matter who doesn’t let the uncertainties creep in their atmosphere by imposing strict rules and regulations on its inhabitants. They are the firm believers of the fact that there is only one truth and we know about that. Uncertain situations are often very novel, surprising and complex and judge a person’s tolerance level. Those who are more tolerant to such behaviors are the citizens of a more open society who believe in flexibility and adaptive to every situation, come what may.

e) Long-term orientation v/s short-term orientation – The societies who embrace long term objectives focus primarily upon developing persistence, increase savings and make themselves adaptive for changing scenario. On the other hand, societies which focus upon short-term objectives value the past more than future. They respect their national identities, traditions and try to fulfill the social obligations as much as possible[13].

India is a place where societies show higher power distance, higher levels of collectivism and masculinity. They tend to avoid uncertain situations as much as they could and take pride in their rich past and valued traditions which even the westerners envy. From a business perspective, however, these scenarios are nowhere near the ideal ones as rules and regulations in India are very steadfast. But Indian’s mentality is changing and India is developing by leaps and bounds despite its urge to remain a closed fraternity. If we look at developed nations and compare their business scenario to that of India, we will find that these nations are very flexible in their monetary and fiscal policies and that is why attract more investment opportunities than many developing countries[14]. They provide relaxations in sales taxes, excise duties etc. whereas countries like India due to its stature as a closed economy and more idealist nature, lags behind considerably. In this way, India is still considered a tough place to do business as compared to other open economies like Japan, Korea, Brazil, South Africa etc.

Points of Discussion with NGO’s Representative

BVVB AG operations are opposed heavily by a local Calcutta based NGO Panjaa and their city chairman Pawan Kalyan. They are of the opinions that these foreign companies with deep pockets use poor people of India as laboratory mice and perform severe drug and vaccine tests over them. Being a product manager of BVVB AG, I will fully deny this notion in my meeting with Mr. Pawan Kalyan as these medicines will also provide millions of patients with huge relief from leprosy and tick-borne encephalitis.As far as the tests are concerned, I’ll emphasize upon the cost-factors attached with the drug-tests and provide him with the intricate details of my company’s tough financial situation. I’ll try to convince him on the humane aspects of my business as pharmaceutical companies are not always profit-oriented. Since BVVB AG right now is undergoing a tough situation and on a lookout for a new venture capitalist, they are desperate to develop a miracle drug which can turnaround their fate overnight. That is why in a sense of urgency, they are in collaboration with CRE trying to test the drugs and get the approval as quickly as possible.

I’ll also talk to him about the proposed compensation structure in case a person suffers from the side-effects of vaccines. Though the cases of failure are pretty low, still, since it involves human lives, I’ll try to show the sincerity level with which my company is working on this compensation structure and try to get his approval nod.

BVVB AG, according to me, is facing a moral dilemma. Since they are in a tight situation and want to come out of it with their heads high, they are compelled to perform the drug tests in India. The only aspect they haven’t considered is a compensation plan as fatalities will take place for sure and if they will work on that, they will be over by this trouble triumphantly.

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