Question

An ethical issue is one with an identifiable problem, situation or opportunity requiring an individual or organization to choose from among several actions that must be evaluated in terms of right and wrong. Ethics is therefore the study of right and wrong. You are asked therefore to consider the following scenario.

South Africa has one the highest AIDS population in the world and the great majority of the South African population is unable to pay for the viral drugs to combat the AIDS virus and the Government resources are stretched to the limit and they are unable to pay for drugs to make it available to the poor people of South Africa where the highest percent of the AIDS population exist.

In South Africa there is a company that manufactures the drugs to combat the AIDS virus. This company is a public company and raises its funds from shareholders who invest their money and is seeking a return on their investment. The company has had the experience in the past on one occasion where it did not perform well and their shareholders did not get a good return on investment causing many investors threatening to pull their investments, which would in turn cause the company to experience heavy financial losses and perhaps threaten its very existence.

The South African government has approached the South African company that manufacturers the drugs requesting that they sell the drugs below cost as well as donate some of the drugs to those who cannot afford the viral drugs because they are poor which is by far the greater portion of the AIDS population. Without these drugs those people are almost guaranteed death.

The company has turned down the request of the South African government.(Present arguments that disagrees with the position of the company)

Answer 1

When company has refused to sell below cost then it should offer some alternatives to the government. For example: Ask for subsidies to its loss in manufacturing of such drugs. It can offer to distribute the drugs with free of cost but to manage the same cost with those customers who are able to pay higher amounts too. Even, charitable organizations can be contacted to offer this medicine with low cost than production cost with bearing the cost 50 -50 %.

A company cannot run if it will distribute its goods and services free of cost. In the given case, shareholders are pulling their name and investment and there is huge pressure from the loss occurred in the real market. In this situation, this company cannot afford to sustain its operations to long run. It has taken right decision as not to supply drugs with free of cost or below the manufacturing costs. I am agree with its current decision . It is free to distribute some medicines as a part of its CSR intiatives.