The stakeholders in this situation were the employees (research scientists doing the R&D), Merck, and the target audience which would be the consumers of the product since they would be the ones who would be archiving the product thus Mercer’s performance is dependent upon the consumers buying the product. Would rank the stakeholders in the following order: 1. Consumers 2. Scientists 3.
Merck would rank the stakeholders in that order because the consumers are a distinct audience to the product that Merck would be mass producing and if the consumers did not provide enough sales for Merck then the performance and profits for the company would not be favorable. Next on the order Of stakeholders would be the scientists since they are the ones who are adhering the requirements and producing the end result they are essentially the ones who have invested the most into the product by being a part of the entire life cycle of producing a drug. Lastly, the third stakeholder would be Merck. Laced Merck last because even though he is the head of the company, he can’t be everywhere at the same time and with there being other areas of the life cycle with just as much importance as others it creates cognitive dissonance for Merck and even though the drug can be mass produced with his help he cannot do it all so the experience and opinions of there have just as much weight on decisions as Merck. 2. What are the potential costs and benefits of such an investment? The potential costs of the investment would stem from the R&D aspect of the drug.
The lifestyle of producing a drug seems to be approximately 1 2 years which would entail 12 years of costs before profits were yielded. This means that the barriers to entry into this investment are quite high so that lowers the risk involved somewhat for Merck. Other potential costs would be the direct labor costs that would employ the scientists who would be doing the Of the product. Lastly, we can’t forget about the overhead which would entail marketing of the product and the actual mass duplication of the product.
With that being said, with costs also come benefits. The benefits of the drug for River Blindness would give Merck a product that is essentially tailored to a distinct target audience that would allow them to service that target audience by having a drug available that other pharmaceutical companies would not be privet to doing. Other benefits would include, less competition from competitors due to the high barriers to entry because of he huge amount of costs and upfront that is required. 3.
If a safe and effective drug could be developed, the prospect of Mercer’s recouping its investment was almost zero. Could Merck justify such an investment to shareholders and the financial community? What criteria would be needed to help them make such a decision? Taking into account that the drug that would be developed would be going to consumers who would not have the insurance or revenue to afford paying for the drug do not think that Merck could justify such an investment to the shareholders and the financial community.
However, what could be leveraged is the value system that Merck was built upon that keeps the internal stakeholders reminded that if they focus on the value proposition for the consumers the profits will follow. In an effort to convince shareholders and the financial community to make a decision to support this project; the shareholders and financial community would need to see numbers from previous drugs (if any)that were made by Merck for a small number of consumers that turned out to be successful for the company.
In addition a feasibility analysis would need to be done to determine what the risk would be to not do the project vs. what the risk would be to do the project. By taking this information it would make it provide an enabler for the shareholders etc. To make a decision as they would be equipped with enough supporting documents that would allow them to have more insight to tell if the ROI would yield such that Merck could recoup its investment. 4. If Merck decided not to conduct further research, how would it justify such a decision to its scientists?
How might the decision to develop the drug or not to develop the drug affect employee loyalty? The only possible justification to go against the company’s value system and not conduct further research would be the leverage that he would have that says if the company does further research and spends the revenue to do so and the drug does not yield enough sales to be profitable, which would mean that those same scientists would then be laid off from work due to a company decline in total revenue.
The decision to not develop the drug could have an adverse effect on the employee/employees causing them to have mixed feelings about the company being that the decision not to conduct further research would be teeming from profits rather than what the company’s core value stands for. In addition, the scientists that had invested a lot of time and effort up to that point most likely have an emotional attachment to their work since it deals with R&D for a new product that will save millions of people from dying.
The decision to develop the drug and finish conducting research would be a great example of sticking to the core value system even when things are not going as expected. Nevertheless a huge sign of faith from the upper management is always a good example for employees. This in return serves as intrinsic value for employees thus increasing employee loyalty. 5. How would the media treat a decision to develop the drug? Not to develop the drug? How might either decision affect Mercer’s reputation?
The media would treat the decision to develop the drug as a sign that there are still companies out in the market with the integrity to still help others even when things are not clear if the company will profit from this endeavor. However, if Merck decided not to develop the drug this is something that could have a negative effect because even though the company is a bottom line business at the end of the day its core mission is to help others and when sight of that gets removed it can taint the image of a company.
By tainting Merck reputation and/or image Merck might be reminded that his decision would be subjected to scrutiny by more than just his own internal employees. 6. Think about the decision in terms of the CARS pyramid. Did Merck have an ethical obligation to proceed with development of the drug? Would it matter if the drug had only a small change to cure river blindness? Does it depend on how close the company was to achieving a cure, or how sure they were that they could achieve it? Or does this decision become a question of philanthropy only?
Merck did not necessarily have an ethical obligation per say, instead the real obligation that he was faced with was more of an economic obligation that weighed the most on his decision in terms of comparing that to an ethical obligation. This however, would still remain the same regardless of if the drug had a small change to cure river blindness or if it did not have a small change to cure river blindness. On another note if Merck was very close to achieving a cure and ad a high confidence level that the cure could be achieved, then at that point it could be argued that Merck would have an ethical obligation to continue the research.
With this being said, it does matter how close Merck was to achieving a cure. The cure for river blindness seems to be a hybrid between the top of the CARS pyramid (philanthropic) and the bottom of the pyramid (economic) obligation depending upon where in the lifestyle Merck was in terms of completing a cure. 7. How does Mercer’s value system fit into this decision? Merck value system of never forgetting that the medicine that they produced Were for Consumers and not necessarily for profits.
It appears that the underlining obligation that Merck is faced with is being able to yield a return on the investment made to find a cure for river blindness and mass produce it. Thinking long term sustainability, Merck decision to continue the research should be based on his value system or the value system is essentially non- existing and also shows the internal employees that economic decisions take prevalence over sticking to the core values of a company. 8. If you were the senior executive of Merck, what would you do?
If I was placed in the dervish position of senior executive would be more inclined to weigh out which decision would have the most risk in terms of halting our sustainability in the marketplace. With that being said, it would most likely be more feasible to take calculated risks when making a big decision such as this. However, just based on the information given, Merck would most likely not reach all 18 million effected people due to the lack of economic spending and non- insured people. This leads me to believe that whether tangible or intangible, the benefits do not outweigh the costs that were paid.