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Expanding Pharmaceutical Operations

You are the vice president of international operations for a large pharmaceutical firm that manufactures an anti-malarial drug. Your firm is considering opening up a factory in a small Central American nation where malaria is still extremely common. The operation will be a joint venture between your firm and the local government. The majority of the people in that country cannot afford the medicine because of the high import tariffs. Yet if your plan goes through, over 200 jobs will be created and the drug's international price will drop by over 50 percent. In a final meeting with a senior government official, the gentleman informs you that if you pay him $500,000 cash, the deal will go through. What issues must you consider? What do you do?

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The pharmaceutical company must consider many stakeholder groups and the various effects each decision will have on them. For those living in the Central American country can receive affordable treatment for malaria they need. They will also benefit economically, from the jobs created. However if the price drops for the drug, the company will lose profitability, unless it also develops drugs for other health issues and markets them in other regions.

The company may have a desire to profit needed drugs for those who need it most. As a corporate citizen, the organization may benefit from improved positive image. This can help increase revenues, through public awareness. The local government the pharmaceutical company will work with must be considered. The government may not operate under the same ethical standards or rules. The $500,000 cash offering indicates the government may operate under different social and cultural standards. The pharmaceutical company may choose to pay the money, if leaders ...

Solution Summary

The solution focuses on the decision of a pharmaceutical company, to possibly expand into Central America. Various benefits and disadvantages of expansion are discussed.