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Ethical Dilemmas in Business: Plumpy’nut Controversy

Introduction

There are various scenarios that bring about ethical dilemmas within a contemporary business setting. The same is true in various levels of interactions in an organization. For example, the social and business interactions may lead to a number of ethical issues that need to be addressed. Each of these interactions can present the parties with dilemmas that bring about ethical issues (Richardson, 2009).

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The current paper is written against this background of business activities and ethical considerations. In this paper, a case study depicting a conventional ethical dilemma is illustrated. Specifically, the author of the paper outlines the controversy around the child nutritional paste, Plumpy’nut. A wide range of disputes arose with regards to the production of this paste. The paper addresses the technical issues regarding the dispute between the patent owners of the product and the American firm that is seeking to take up these rights.

Plumpy’nut is produced by a French based company. The company operates under the trading name ‘Nutriset’. The product is mainly used as a nutritional supplement for children suffering from malnutrition. In their book, Shaw (2010) makes reference to this product. Shaw highlights a number of case studies where ethical dilemmas in business arise as a result of conflicts between different parties involved in the operations. Presently, the United Nation’s Children Fund (UNICEF) is Nutriset’s biggest consumer. Such a large organization is considered as a lucrative client by any business firm in the world. According to Shaw (2010), UNICEF was responsible for the purchase of close to 92% of Nutriset’s production. Such a figure is an indication of the significance of this body (UNICEF) to the operations of Nutriset.

The ethical dilemma is primarily brought about by a challenge to the patent rights that Nutriset holds with regards to the Plumpy’nut brand and product. Shaw (2010) argues that the patent has been challenged by two non-governmental organizations (NGOs) based in the United States (US). The suit is based on the grounds that the patent held prevents other companies from the production of a similar product. Secondly the suit argues that Nutriset’s claim to the patent, acts as an inhibitor to accessing treatment (Shaw, 2010). The NGOs are prompted by the idea that production of the nutritional supplement cannot meet international standards. Taking away the patent on the other hand would render many unemployed and further lead to starvation. An ethical dilemma arises.

At the heart of the controversy is the issue of meeting the production targets. Plumpy’nut.

Annotated Bibliography

Ethical Issues

As already mentioned, the suit challenging the patent rights of the production of Plumpy’nut, has brought about an ethical dilemma of a business nature. According to Macer (2002), ethical dilemmas are characterized by a number of ethical issues. With reference to the Plumpy’nut controversy, the following ethical issues arise out of the dilemma presented:

  1. Fundamental issues – Businesses establish a certain relationship with the consumers of their products. To this end, trust is regarded as the fundamental issues in the controversy. A loss in the patent would diminish the credibility of Nutriset among its core consumers.
  2. Compliance issues – All businesses are required to comply to certain ethical standards the ethical dilemma brings into perspectives of whether both parties comply with set standards of production and overall trade. Absence of such standards would imply a subsequent loss of rights to production.
  3. Decision making issues – businesses carry out their activities once certain decisions are made. A withdrawal of the patent, would severely affect the franchises associated with Nutriset. Consequently there would be a direct implication of the same in terms of labor and other trade related decisions.

The ethical issues, raised in this annotated bibliography, bring into perspective two theories associated with ethics. Utilitarianism and egoism are two theories associated with ethics that are out rightly depicted in the Plumpy’nut Controversy. According to Mill (2002), an action is seen as correct when its result is happiness in the persons affected. On the other hand, egoism allows one to pursue an interest of their own choice regardless of the impact on others.

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Richardson, B. J. (2009). Keeping Ethical Investment Ethical: Regulatory Issues for Investing for Sustainability. Journal of Business Ethics, 87(4), 555-572.

A business relationship is expected to thrive once certain parameters like ethics are kept in consideration. To this end, scholars like Richardson (2009) advice on the need to respect the greater good in an agreement. For instance, the Plumpy’Nut controversy can be resolved out of court avoiding the damage of loss of the patent in both cases. An agreement can be reached to have a joint production between the two parties. Such an agreement would be informed by the utilitarianism theory.

Soini, S., Ayma, S., & Matthijs, G. (2008). Patenting and licensing in genetic testing: ethical, legal and social issues. European Journal of Human Genetics, 16, S10-S50.

The Plumpy’nut controversy, as already mentioned, is brought about by the patenting rights. Essentially, one who has patented their own inventions, reserves the right to exclude others from profiting from the invention. However, Soini, Ayma and Matthijs (2008), examine the historical perspective on patents. Soni et al. (2008) argue that patents in the relating to promotion of human life ought to be rethinked.

No one single person can have a patent to life related inventions. The inability by Nutriset to meet their targets poses a health risk to malnourished children (Shaw, 2010). A collaboration between Nutriset and the American NGOs would increase production of the much needed supplement. Consequently, many children, who would have, other-wise suffered lost their nourishment, would be saved. The same applies for the workers in Plumpy’nut franchises.

Macer, D. R. (2002). Patent or perish? An ethical approach to patenting human genes and proteins. The Pharmacogenomics Journal, 2(6), 361-366.

Ethical dilemmas, in business, result from the point of view of morality. To this Macer (2002) raises a fundamental ethical issue regarding patents in the medical field. Macer (2002), the medical field has a direct impact on people’s lives. In the current ethical dilemma, Nutriset is faced with the opportunity of allowing their clients to see their moral stance. If their objective is to save lives then allowing their patent to expire will be seen as utilitarian. The same would endear them to the consumer since their objective is the well being of the end-user of their program.

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Final Memorandum

Background

As already mentioned Nutriset, is the parent company responsible for the production, marketing and sale of Plumpy’ Nut. The case study by Shaw (2010) indicates that Plumpy’nut, as a nutritional supplement, is an important requirement for malnourished children. Most of such children are found in war torn or disaster areas. For instance, the civil war in Syria has led to hundreds of displaced families. The children of such conflict areas end up being malnourished in the event of food scarcity. During such humanitarian crises, UNICEF is often responsible for guaranteeing the well-being of such children. Given that Plumpy’nut contains most of the required nutrients, the same explains why UNICEF is Nutriset’s core client

An upsurge in natural disasters and the need for nutritional supplements implies that the production should be higher. Already, Shaw (2010) indicates that UNICEF alone makes purchases that slightly exceed 90% of Nutriset’s total production capacity. Unfortunately, Nutriset’s total production capacity does not meet the stipulated capacity. To this end, there exists a deficit in the overall supply of the much needed commodity. Countries like India and Syria record high numbers of malnourished children. That number coupled by other high figures in Africa, create the grounds for increased production.

The two American NGOs, interested in obtaining the patent, have demonstrated their ability to match the production. Such a move would effectively deny Nutriset the monopoly to sell their product to UNICEF. In addition, the same would also result in the loss of jobs due to the franchises that would be edged out of the market by the American NGOs. Unfortunately, the American NGOs put up a case that the inability for Nutriset to meet the required capacity is resulting in deaths of many children (Shaw, 2010). To this end, an ethical dilemma exists

Facts Summary

There are two US based NGOs who have challenged Nutriset’s right to holding the patent for the production of the Plumpy’nut. The suit argues ownership of the patent has inhibited the production of similar product. Also, Nutriset’s ownership of the patent presents a moral conundrum. The same is due to the Nutriset’s inability to meet the required production capacity which in turn leads to further starvation of children (Shaw, 2010). Depending on how the suit turns out, there are ethical issues which arise that present a dilemma to both companies.

Once the case is heard and determined and Nutriset loses its patent rights, several on-going projects will come to a halt. Macer (2002) argues that the same is brought about by the shift in ownership of exclusive rights. Macer (2002) adds that a number of infants who depend on such feeding programs will effectively lose their chance of surviving from malnourishment. Shaw (2010) further suggests that countries that relied on such programs would have to reconsider a new strategy. Meanwhile, the patients will continue suffering.

There is, also, a possibility that Nutriset will not lose their patent rights. According to Shaw (2010), such a decision will also result in a number of children succumbing to malnutrition. However, as opposed to the initial situation the new deaths would be due to Nutriset’s inability to meet the expected demands. There arises a need to address Nutriset’s production capacity. There is a likelihood of a global pandemic arising, in the event that the extra demand is not met, since the patent excludes any other party from the said production. The same explains the ethical dilemma.

Ethical Dilemma

The discussions in this paper indicate that ethical dilemma can be regarded to as moral dilemmas. Soinin et al. (2008) define the same as a case in point where organization is required t make a choice based on two unique options. Unfortunately, despite the decision, there isn’t an ethically satisfactory solution to the existing scenario. In the current international business climate ethical dilemmas present themselves in many organizations and companies. The dilemmas call for prudent decisions being made. Mill (2002) indicates that such must safeguard the companies’ reputation. Resultant decisions must also maintain existing client confidence.

Such dilemmas have a number of consequences on business operations. For example, they affect the efficiency of the firm and its ability to achieve the envisaged objectives. In addition, it becomes hard for the firm to adhere to the societal and personal ethical guidelines. An ethical dilemma, according to Mill (2002) makes the assumption that the decision arrived upon, is done so in conformity to a number of societal norms. Depending on a given society, such norms may require conformity to religion and other culturally acceptable perceptions. Shaw (2010) argues that such conformity must be seen as the most ethical.

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The situation facing Nutriset is similar to what other organizations operating in the industry have to contend with. For example, a number of firms have to make efforts to resolve the various ethical dilemmas that threaten to derail their activities. In the Facts Summary section, it was indicated that Nutriset os faced with a situation where it is forced to choose between doing the company is required to di under its aims and objective or conforming to societal expectations.

In terms of the company objectives, it is not in the interest of Nutriset to lose its patent rights to the US-based NGOs. Shaw (2010) suggests that the ability of the NGOs to meet the required production capacity elevates them on to a moral pedestal since millions of lives will be saved. Such a move would be seen as more humane, since the bracket of children saved would be broadened. Nutriset is faced with a moral dilemma of defending their right to the patent, indicating a plan to increase their production. The management of the company is faced with the dilemma of responding to the humanitarian call or sticking to the organizational demands

Ethical Issues

When a company is faced with an ethical dilemma, the ethical issues that arise, affect the entire organization. Nutriset is regarded as the only food producing company that fully commits its resources to itself to nutritional issues in developing countries and war torn areas. Shaw (2010) emphasizes that the company’s performance in addressing the Africa food challenges is second to none. Increased malnutrition cases in India have seen the company broaden its services. Notwithstanding, the company’s effort in humanitarian relief, there exists an ethical dilemma on whether the company should cede ownership of the patents to the American based firms.

In point form, the following ethical issues emerge due to the dilemma presented;

Fundamental issues

Integrity and trust are two of the most important issues that an organization should strive to uphold. Mill (2002) suggests that the a company earns the trust of its customers if the company in reference exhibits commitment to ethical issues. The humanitarian nature associated with Nutriset is responsible for the high esteem the company is accorded by consumers. The emphasis on producing goods that end up assisting to save lives is regarded as morally correct.

Unfortunately, the company faces the possibility of losing its patent rights to the two NGOs. Such a move would significantly erode all the trust that the company had spent so many years building. Shaw (2010) indicates that, by losing the patent rights, Nutriset is Integrity in the production of health products would be greatly reduced (Shaw, 2010). Such an ethical issue has a direct impact on the company’s stakeholder. Investors do not prefer lack of integrity and trust in an organization.

Compliance and Governance issues

It is another important consideration for the firm. A typical society is governed by a number of rules and regulations touching on the environment, consumer safety, and such other issues. The laws affect the operations of given organizations in the country. For example, the law on discharge of waste products affects how companies have to deal with their by-products. Companies and individuals have to adhere to the said law. As a company, Nutriset is not an exception. It is expected that the operations of this firm will conform to the rules and regulations set out in the legislative bodies of the country it is operating from. Richardson (2009) argues that such an adherence is more specific in cases where a country has a franchise. In the event that, Nutriset does not abide by any of the laws, non-compliance to government regulations is implied. Should the company eventually lose ownership of the patent, then all franchises cease to operate. Any continued operations of such subsidiaries and affiliates is seen a truancy, on the part of the company. Such disregard for the law creates a bad impression for the company.

Decision-Making issues

The performance of an organization is informed by its ability to carry out operations based on decisions made. The choice to relinquish ownership of the patents lies with the management at Nutriset. Decisions made affecting the company, with reference to its protection are made in consideration of the existing employees. For instance, Nutriset has the option of relinquishing any claim to the patent. The result would be the laying off of existing stuff. To this end, the ethical issue that results is whether the company is better placed to lose its workforce or safeguard them at the expense of the millions of children who would die due to the inadequate production mentioned.

Such a scenario results into an ethical issue for the company since a loss of the patent rights, signals the end of employment for several workers. Shaw (2010) indicates that, subsequently the said employees would no longer enjoy legal protection. A loss of the patent rights to the two NGOs results in a cessation of association with the existing stakeholders. To this end, organizations like the World Health Organization (WHO) and UNICEF will reduce their bulky purchases from the company. The ramifications of losing the patent point to a bleak future in the company.

Solutions

The best way to solve the ethical dilemma is through collaboration. According to Mill (2002), utilitarianism and egoism are two theories that appear to supplement each other. To this end, the ethical dilemma depicted in this report can be solved if the two organizations can come into an agreement that would shore up production. A partnership would ensure that the two companies would combine production efforts. Such a move would ensure that nutritional requirements of the malnourished children are met. The Utilitarian Theory, discussed above, perceives that an action deemed as ethically correct if the overall good surpasses any possible shortcomings. To this end, the partnership would be a suitable solution to the problem at hand.

The greater good in this collaboration is the provision of food to many children who would have otherwise died of malnourishment. According to Macer (2002), employees can get a job elsewhere. However, the same would be a minor setback to the staff regardless of any gratuity.

Recommendations

From the discussions outlined in this paper, a suitable recommendation would be a partnership. In the interest of humanitarian aid, such a move would guarantee the increased production of the commodity. Shaw (2010) indicates that the ethical implications far out ways the negative ones. It is noted that the organization will continue enjoying the profits it was making before the new arrangement. For example, it will retain its revenue even after it has given up its patent rights. The recommendation will ensure that all the ethical dilemmas and ethical issues are addressed. To this end, the deal will guarantee that Nutriset still has control over the company. The welfare of the employees will also be safeguarded. For example, they will retain their positions in the organization. It will be unethical to address one problem by creating another dilemma. To this end, it is unacceptable to resolve the profitability issue by kicking out employees. There is a way the company can strike a balance between the two requirements. All problems will have been effective addressed as a result.

The other advantage of this recommendation is that it will result in plenty of job opportunities. Shaw (2010) argues that the adoption of the Utilitarian Theory in implementing this particular recommendation the greater good is realized. The suggested job losses would be avoided. Under the recommended agreement, the same would see the NGOs get inclusivity into the patent for US based production only

Conclusion

The discussions have indicated how an ethical dilemma in a business arises. The role of patenting in the medical field is also outlined. According to Brockett and Razzae (2012) the best way to solve an ethical dilemma is to examine the greater good. To this end, The Utilitarian Theory comes in handy. The paper recommends a form of understanding between Nutriset and the US NGOs, where the former waives the rights to production in the US. Consequently, the move increases the production to meet the growing demand.

Implementation of the recommendation will guarantee the retention of a Nutriset’s credibility within the industry. The relevant stakeholders will retain the trust, thereby guaranteeing a win-win situation. The recommendation will create a framework for solving future ethical dilemmas. Evidently, the move will result in the increase in the number of children secured from malnutrition. According to Soini et al. (2010), when an organizations overcomes its ethical dilemmas, it allows for growth. To this end, the recommendations made have an implicate on company performance of any organization that allows for dialogue. Legal suits tend to destroy an organizations’ image.

References

Brockett, A., & Rezaee, Z. (2012). Corporate sustainability: Integrating performance and reporting. Hoboken, N.J.: Wiley.

Macer, D. R. (2002). Patent or perish?: An ethical approach to patenting human genes and proteins. The Pharmacogenomics Journal, 2(6), 361-366.

Mill, J. (2002). Utilitarianism: Easy read large edition. Indiana: Hacket Publishing.

Richardson, B. J. (2009). Keeping ethical investment ethical: Regulatory issues for investing for sustainability. Journal of Business Ethics, 87(4), 555-572.

Shaw, W. (2010). Business ethics: A textbook with cases. Connecticut: Cengage Learning.

Soini, S., Ayma, S., & Matthijs, G. (2008). Patenting and licensing in genetic testing: Ethical, legal and social issues. European Journal of Human Genetics, 16(10-50), 23-24.

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