This lesson will discuss stakeholder theory. The view that organizations have multiple stakeholders that affect and are affected by the organization. [MUSIC] Welcome to the second module of Global Business Ethics and Corporate Responsibility. In this module, we're going to discuss stakeholder theory. A theory that will help us in our decision making processes. And we're going to talk about a case, Bayer CropScience in India. But first, before we turn to those two, let's go back and look one more time at the Mark case. And this time, we're going to use the ethical decision-making model that you will find on page 21 of Business Ethics and Corporate Responsibility, the reading that you've been assigned as required. Now we've done this before. But you'll see the process itself. First we look at the facts, then we look at the assumptions. We try to obtain as many facts as we can. You're never always perfect on that, no one is. We look at the culture and the context, the issues and the challenges, the power dynamics. Think about Merck, it's a very big company, a lot of power. Stakeholders who, and by stakeholders we may know, who has an interest? Who affects the company, and who's effected by the company? And what are their motivations, and what are their powers? Then we look at their alternatives, which we've done in that case. The impact of the alternatives and what values are at stake. And then what member? What should Merck do? And then, now what? What happens? And it's the now what, we're going to focus on briefly as we talk about Merck. So look at Merck again. I think we've seen the facts, the culture and the ethical issues and the power dynamics. We hadn't talked much about that. But Merck is a very big company. And it can decide things, and that will affect the decision making, not only their decision making but the decision making of other companies. Who often model their, their actions on Merck 's. And now let's look at the stakeholders, which we have talked about but we haven't talked about them as stakeholders. The executives, of course, they make the final decision in this case. This case was taken not only to the executives, but to the very board itself. The board itself decided that Merck would go ahead with investigating this drug and developing the drug. The employees, the researchers, I talked about the importance of the researchers here, obviously the patients we kind of forgotten about them, the people have river blindness for heaven sakes. They're really important. And in many physicians and clinics, in this case, we don't have any physicians and any clinics. They're just going to have to figure out how to give it away to people, the suppliers and communities. And then of course most importantly, the 30 to 100 million people with river blindness. People with other diseases for whom Merck is not developing research because they're developing this drug. And then the countries themselves, if you could imagine a country with let's say, 10 million people with river blindness, that's a huge amount of the workforce of people who are blind. And really can't do as much as those people with sight. Particularly if you have a country that doesn't know how to deal with blindness and to help blind people get jobs which they can, they're very capable. But that takes us some skills, and not every country, not every company, not every individual has those skills. So now what is this? We've figured out, should Merck invest in the drug, and they do, here's to say, we've done that, we've done all of these alternatives, we've talked about them. And then who benefits? The shareholders. They benefit from developing a profitable drug. They will not benefit from this, developing this drug. The researchers have low morale if they don't, but they do. And people with river blindness, what happens to them? Intuitively, it would appear we want to do the right thing to do, and we talked about the cost benefit analysis. We talked about all of these except one thing. What kind of precedent does this set for other drug industries? What happens is after Merck decided to give river blindness away, then some other people, other drug companies with other drugs for very rare diseases realized that they were going to have to give those drugs away too. So it set a precedent for the other drug companies. Very interesting. And of course that spread now to the HIV, distribution of HIV drugs in Africa, where a number of companies, including Merck give away ttheir HIV drugs at a very low price or a very low price. So, as we know, Merck decided to give away this drug. But this is their challenge, how do you give away a drug to most remote places in the world? You can even hard to get to. And Merck is in the pharmaceutical business, they don't know anything about distributing globally. A drug that they can't just send off to some clinic or pharmacy or physician or someone to distribute it. And how do you avoid the black market? Merck realized that the only way to distribute this drug is village by village, person by person. But Merck don't know how to do that and we don't expect them to know how to do that. So what they did, they formed a committee including the World Health Organization. And this committee distributes this drug literally village by village, person by person, child by child. The company has pledged to give away Mectizan forever. They now today and you can look this up, they have given away over 100 million doses of this drug. And river blindness is considered almost a disease that's extinct, like small pox. There's is almost no one today who has small pox. And river blindness, there's almost no river blindness today. There is some, but is virtually going the way of small pox, is becoming extinct. [MUSIC]
