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Unformatted text preview: face of dwindling funding from the US, a group includ- ing the United Nations, the World Bank, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and for» rner President Bill Clinton announced in April 2004 a joint plan to buy and distribute cheap, generic AIDS drugs in poor countries. The generic drugs will be pur- chased primarily from companies based in India at around $140 per person per year. Additional hope was CASE 3 Footwear International offered by the World Trade Organization in August 2003, when it agreed to give poor nations greater access to inexpensive life-saving medicine by altering interna- tional trade rules. The agreement will permit poor coun- tries to import generic versions of expensive patented medicines, buying them from countries such as India and Brazil, without running afoul of trade laws protect- ing patent rights.24 QUESTIONS FOR DISCUSSION 1. Do a stakeholder analysis of this global situation— that is, name the various parties involved and explain the goals of each, the rationale for their positions, and the short- and long-term implications of the situation each party faces. 2. What ethical philosophy should. apply to this situation: moral ethnocentrism, ethical relativism, or moral universalism? Explain the rationale for your answer and relate it to the parties you identified in question 1. 3. Is a universal code of ethics possible for the global pharmaceutical industry? Explain how that could work. 4. What should, or can, the managers of the Western pharmaceutical companies do to resolve this problem? Is it entirely their responsibility? What other parties could, or should, help pay for the drugs? Draw up a plan of action from the perspective of a company executive. 5. Do a follow-up on this case situation. What has happened since this writing in April 2004? Has the position of the world’s companies changed? If so, how? What changes have there been for the other major stakeholders? 6. What lessons are there for MNCs from the way this situation has evolved and the responses of various stakeholders. 24E. Becker, “Poor Nations Can Purchase Cheap Drugs Under Ac- cord,” www.mytimes.com, August 30, 2003. Cane 5 Footwear International John Carlson frowned as he studied the translation of the front—page story from the afternoon’s edition of the Maillot, a fundamental newspaper with close ties to an oppositiOn political party. The story, titled “Footwear’s Unpardonable Audacity,” suggested that the company had knowingly insulted Islam by including the name of Allah in a design used on the insoles of sandals it was manufacturing. To compound the problem, the paper had run a photograph of one of the offending sandals 0n the front page. As a result, student groups were calling for public demonstrations against Footwear the next day. As managing director of Footwear Bangladesh, Carlson knew he would have to act quickly to defuse a potentially explosive situation. ABOUT THE COMPANY Footwear International is a multinational manufacturer and marketer of footwear. Operations span the globe and include more than eighty-three companies in seventy Countries. These include shoe factories, tanneries, engi- neering plants producing shoe machinery and moulds, Product development studios, hosiery factories, quality control laboratories, and approximately 6,300 retail stores and 50,000 independent retailers. Footwear employs more than 67,000 people and produces and sells in excess of 270 million pairs of shoes every year. The head office acts as a service center and is staffed with Specialists drawn from all over the world. These specialists, in areas such as marketing, retailing, product development, communications, store design, electronic data processing, and business administration, travel for much of the year to share their expertise with the various companies. Training and technical education, offered through company-run colleges and the training facility at headquarters, provide the latest skills to em- ployees from around the world. Although Footwear requires standardization in technology and the design of facilities, it also encour- ages a high degree of decentralization and autonomy in its operations. The companies are virtually self- gaverning, which means their allegiance belongs to the countries in which they operate. Each is answerable to a board of directors that includes representatives from the local business community. The concept of “partner- ship” at the local level has made the company welcome :3 PART I Comprehensive Cases internationally and has allowed it to operate successfully in countries where other multinationals have been un- able to survive. BAN GLADES H With a population approaching 110 million in an area of 143,998 square kilometers (see Exhibit (33-1), Bangladesh is the most densely populated country in the world. It is also among the most impoverished, with a 1987 per capita gross national product of $160 and a high reliance on for- eign aid. More than 40 percent of the gross domestic product is generated by agriculture, and more than 60 per- cent of its economically active population works in the agriculture sector. Although the land in Bangladesh is fer- tile, the country has a tropical monsoon climate and suf- fers from the ravages of periodic cyclones. In 1988, the country experienced the worst floods in recorded history. The population of Bangladesh is 85 percent Muslim, and Islam was made the official state religion in 1988. Approximately 95 percent of the population speaks Bengali, with most of the remainder speaking tribal dialects. Bangladesh has had a turbulent history in the twen- tieth century. Most of the country was part of the British- ruled East Bengal until 1947. In that year, it joined with Assam to become East Pakistan, a province of the newly created country of Pakistan. East Pakistan was separat— ed from the four provinces of West Pakistan by 1,600 kilometers of Indian territory, and although the East was more populous, the national capital was established in West Pakistan. Over the following years, widespread dis- content built in the East whose people felt that they re- ceived a disproportionately small amount of development funding and were under-represented in government. Bay of Bengal Following a period of unrest starting in 1969, the Awami League, the leading political party in East Pak— istan, won an overwhelming victory in local elections held in 1970. The victory promised to give the league, which was pro—independence, control in the National Assembly. To prevent that happening, the national gov— ernment suspended the convening of the Assembly in— definitely. On March 26, 1971, the Awami League proclaimed the independence of the People’s Republic of Bangladesh, and civil war quickly followed. In the en- suing conflict, hundreds of thousands of refugees fled to safety across the border in India. In December, India, which supported the independence of Bangladesh, dew clared war, and twelve days later Pakistan surrendered. Bangladeslnhad won its independence, and the capital of the new country was established at Dhaka. In the years immediately following independence, industrial output declined in major industries as the result of the depar- ture of many of the largely non—Bengali financier and managerial class. ' Throughout the subsequent years, political stability proved elusive for Bangladesh. Although elections were held, stability was threatened by the terrorist tactics re— sorted to by opposition groups from both political ex— tremes. Coups and countercoups, assassinations, and suspension of civil liberties became regular occurrences. Since 1983, Bangladesh had been ruled by the self- proclaimed President General H. M. Ershad. Despite demonstrations in 1987 that led to a state of emergency being declared, Ershad managed to retain power in elec- tions held the following year. The country remains polit- ically volatile, however. Dozens of political parties continually maneuver for position, and alliances and coalitions are the order of the day. The principal opposi- tion party is the Awami League, an alliance of eight po- litical parties. Many of the parties are closely linked with so-called opposition newspapers, which promote their political positions. Strikes and demonstrations are fre— quent and often result from cooperation among opposi- tion political parties, student groups, and unions. FOOTWEAR BANGLADESH Footwear became active in what was then East Bengal in the 1930s In 1962, the first major investment took place with the construction of a footwear manufacturing facil- ity at TOngi, an industrial town located thirty kilometers north of- Dhaka. During the following years, the compa- ny expanded its presence in both conventional and un- conventional ways. In 1971, the then managing director became a freedom fighter, while continuing to oversee operations. He subsequently became the only foreigner to be decorated by the government with the “Bir Prank” in recognition of both his and the company’s contribu- tion to the independence of Bangladesh. In 1985, Footwear Bangladesh went public and two years later spearheaded the largest private-sector foreign investment in the country, a tannery and footwear factory at Dhamrai. The new tannery produced leather for local Footwear needs and the export market, and the factory produced a variety of footwear for the local market. By 1988, Footwear Bangladesh employed 1,800 em- ployees and sold through eighty-one stores and fifty—four agencies. The company introduced approximately 300 new products a year to the market Using their in-house design and development capability. Footwear managers were particularly proud of the capability of the person- nel in these departments, all of whom were Bangladeshi. Annual sales in excess of ten million pairs of footwear gave the company 15 percent of the national market in 1988. Revenues exceeded $30 million and after-tax profit was approximately $1 million. Financial- ly, the company was considered a medium contributor within the Footwear organization. With a population ap- proaching 110 million, and per capita consumption of one pair of shoes every two years, Bangladesh was per— ceived as offering Footwear enormous potential for growth both through consumer education and competi- tive pressure. The managing director of Footwear Bangladesh was John Carlson, one of only four foreigners working for the company. The others were the managers of produc- tion, marketing, and sales. All had extensive and varied experience within the Footwear organization. THE INCIDENT On Thursday, June 22, 1989, John Carlson was shown a copy of that day’s Melllnr, a well-known opposition newspaper with pro-Libyan leanings. Under the head- line “Footwear’s Unpardonable Audacity,” the writer suggested that the design on the insole of one model of sandal produced by the company included the Arabic spelling of the word Allah (see Exhibit C3-2). The story suggested that Footwear was under Jewish ownership and to link the alleged offense with the gunning down of £0. Footwear International CASE 3 many people in Palestine by low; The story highlighted the fact that the design was on the insole of the sandal and therefore, next to the bottom of the foot, a sign of great disrespect to Muslims. Carlson immediately contacted the supervisor of the design department and asked for any information he could provide on the design on the sandals. He already knew that they were from a medium-priced line of women’s footwear that had the design on the insole changed often as a marketing feature. Following his in- vestigation, the supervisor reported that the design had been based on a set of Chinese temple bells that the de— signer had purchased in the local market. Pleased by the appearance of the bells, she had used them as the basis for a stylized design, which she submitted to her supervi- sor for consideration and approval (see Exhibit C3-3). All the employees in the development and market- ing department were Muslims. The supervisor reported that the woman who had produced the offending design was a devout Bengali Muslim who spoke and read no Arabic. The same was true of almost all the employees in the department. The supervisor confirmed to Carlson that numerous people in the department had seen the new design prior to its approval, and no one had seen any problem or raised any objection to it. Following the conversation, Carlson compared the design to the word Allah, which he had arranged to have written in Arabic (see Exhibit C3-4). Carlson was perplexed by the article and its timing. The sandals in question were not new to the market and had not been subject to prior complaints. As he reread the translation of the Maillot article, he wondered why the Jewish reference had been made when the family that owned Footwear International was Christian. He also wondered if the fact that students from the universi- ty had taken the sandals to the paper was significant. As the day progressed, the situation got worse. Carlson was shown a translation of a proclamation that had been circulated by two youth groups calling for Unpardonable Audacity of Footwear m In Bangladesh a Sandal with Allah as Footwear trade mark in Arabic designed in calligraphy has been marketed although last year Islam Was made the State Religion in Bangiadesh.The Sandal in black and white contains Allah in black. Prima facie it appears it has been de- signed and the Alif“the first letter in Arabic” has been jointly written. ExcludingNif it reads LlLLAH. in Bangladesh after the Satan Rushdie’si SatanicVerses which has brought unprecedented demonstration and innumerable strikes (Hartels).This international shoe manufacturing organization underjewish ownership with the design of Allah has made religious offense.Where for sanctity of lslam One million people ofAfghanistan have sacrificed their lives and wherein occupied Palestine many people have been gunned down by Jews for sanctity of Islam in this country the word Allah under this guise has been put under feet. Last night a group of students from Dhaka university came to Meillat office with a couple of pairs of Sandal.The management staff 0f Footwear was not available over telephone.This sandal has got two straps made of foam. :Ii'le translation is identical to that which Carlson was given at work. Ayatollah Khomeini, the late leader of Iran, for crimes against Islam. Salman Rushdie was the author of the controversial book The Satanic Verses. The author had been sentenced to death, in absenria, by PART I Comprehensive Cases 05-5 Thermal “hills " "i ' ' on the sandal. . Company name and logo‘ The company’s name and logo appeared prominently on the insole of the sandal. Both of the images in the exhibit were redrawn from copies of facsimiles sent to headquarters by John Carlson. demonstrations; against Footwear to be held the next day (see Exhibit C3-5). The proclamation linked Footwear, Salman Rushdie, and the Jewish community and ominously stated that “even at the cost of our lives we have to protest against this conspiracy.” i I i - Translatio‘ The audacity through the use of the name "Aliah” in a sandal. This exhibit was redrawn from a facsimile sent to headquarters by John Carlson; More bad news followed. Calls had been made for charges to be laid against Carlson and four others under a section of the criminal code that forbade “deliberate and malicious acts intended to outrage feelings of any class by insulting its religion or religious believers” (see Exhibit C3—6). A short time later, Carlson received a copy of a statement that had been filed by a local lawyer although no warrants were immediately forthcoming (see Exhibit C3-7). While he was reviewing the situation, Carlson was interrupted by his secretary. In an excited voice, she in- formed him that the prime minister was being quoted as calling the sandal incident an “unforgivable crime.” The seriousness of the incident seemed to be escalating rapidly, and Carlson wondered what he should do to try to minimize the damage. Let Rushdie‘s Jewish Footwear Company be prohibited in Bangladesh. I Dear people who believe in one God it is announced in the holy Quran Allahs name is above everything but shoe manufacturing Jewish Footwear Shoe Company has used the name Allah and shown disrespect of unprecedented nature and also unpardonable au- dacity/After the failure of Rushdie's efforts to destroy the beliefs of Muslims in the Quran, Islam and the prophet (SM) who is the writer of Satanic verses the jewish People have started offending the Muslims.This time it is a fight against Allah. In fact Daud Haider. Salman Rushdie Viking Penguin and Footwear Shoe Company all are supported and financed byJewish communityTherefore no com- promise with them. Even at the cost of our lives we have to protest against this conspiracy. For this procession and demonstration will be held on 23rd,]une Friday afterJumma prayer from Baitul Mukarram Mosque south gate. Please ioin this procession and announce we will not pardon Footwear Shoe Company's audacity. Footwear Shoe Company has to be prohibited, don't buy jewish products and Footwear shoes. Be aware Rushdie’s partner: issued by Bangladesh Islamic Jubashibir (Youth Student Forum) and Bangladesh Islamic Satrashbir (Student Forum} ‘This Iranslaiion is identical to that which Carlson was given at work. _—“ CASE 3 Footwear International EXHIBIT 05-6 Section 295.com Criminal Code. . 295-A. Deliberate and malicious acts intended to outrage religious feelings of any class by insulting its religion or religious believers.Whoever. with deliberate and malicious intention of outraging the religious feelings of any class of [the citizens of Bangladesh]. by words. either spoken or written, or by visible representations, insults. or attempts to insult the religion or religious beliefs of that class, shall be pun- ished with imprisonment . .. .. . In order to bring a matter under S. 295-A it is not the mere matter of discourse or the written expression but also the manner 0f it which has to be looked to. In other words the expressions should be such as are bound to be regarded by any reasonable man as grossly offensive and provocative and maliciously and deliberately intended to outrage the feelings of any class of citizens. . . . If the inju— rious act was done voluntarin without a lawful excuse, malice may be presumed. The plaintiff most respectfully states that: I)The plaintiff is a lawyer, and a Bangladeshi Citizen and his religion is Islam. He is basically a devout MuslimAccording to lslamic tradition he regularly performs his daily work. _ _ ' . ' . _ 2) The first accused of this .. . is the Managing Director of Footwear Shoe Company, the second accused is the Productibn Manager of the said company, the third accused is the Marketing Manager, the fourth accused is the Calligrapher of the said company and-laSt " ' accused is the Sales Manager of the said company.The said company _is-an international organization having shoe business indifferent- _ countries. - '_ -. 3) The accused persons deliberately wanted to outrage the religion of Muslims by engraving the calligraphy of “Allah” in Arabic on a: sandal thereby to offend the religion of majoritythis Muslim Country. By marketing this sandal with the calligraphy of“Allah-" they have I offended the religions feelings of millions of Muslims. |t.is the solemn religious duty and responsibility of every devout Muslim to pro-'_ -2 tect the sanctity of “Allah.” The plaintiff first saw the sandal with-this calligraphy on 22nd june I989 at Elephant road shop. ' ' The accused persons collectively and deliberately wanted this calligraphy under the feet thereby to offend the religion of mine-and _ many other Muslims and have committed a crime under provisions of section 295A of the Penal Code.At the time of the hearing-the : evidence will be provided. _ ' '_ .' 7 Therefore under the provisions of section 295A of the Penal Code the accused persons to be issued with warrant of arrest and be -' brought to court for justice. b ' ' The names of the Witnesses I) 2) 3) ——————-——______________ QUESTIONS FOR DISCUSSION 1. You are in John Carlson’s position. Analyze the - What issues are of greatest concern to Footwear Situation facing Footwear, and prepare a detailed Bangladesh? To Footwear International? plan of action to deal with your immediate responsibilities as well as the entire situation and a long-term plan. The following suggestions may help you develop your plan: 2. These events actually happened. Ask your professor for the information on the follow-up events. Do you think this situation could happen again? ° Use a stakeholder analysis to assess the role and 013- Source: REPFOdl-Iced by Permission 0f “16 author- (Copyright © jectives of various interest groups and evaluate what is R. William Blake, Faculty of Business Administration, Memorial Uni- going on and why, and to look beyond the immediate “why of Newfoundland‘ St' 10h“ Canada‘) situation. ' Consider what role or roles local politics play in the Footwear case, and who are the principal actors in this real-life business drama. if 3}. t: :3: :r: M g. $51 g. \‘3 r. -‘.I' t: \. 32. iii :1. is Q5 s: 5:3 hi: 5: i1. 3: is a; 5: f! 5:: Er; ...
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