Corporate Governance and Product Safety

Dr. Srinivasan is a senior scientist working for a reputed biotechnology company known for its cutting-edge research in pharmaceuticals. Dr. Srinivasan is heading a research team working on a new drug aimed at treating a rapidly spreading variant of a new viral infectious disease. The disease has been rapidly spreading across the world and the cases reported in the country are increasing. There is huge pressure on Dr. Srinivasan’s team to expedite the trials for the drug as there is a significant market for it, and the company wants to get the first-mover advantage in the market. During a team meeting, some senior team members suggest some shortcut for expediting the clinical trials for the drug and for getting the requisite approvals. These include manipulating data to exclude some negative outcomes and selectively reporting positive results, foregoing the process of informed consent and using compounds already patented by a rival company, rather than developing one’s own component. Dr. Srinivasan is not comfortable taking such shortcuts, at the same time he realises meeting the targets is impossible without using these means. (a) What would you do in such a situation? (b) Examine your options and consequences in the light of the ethical questions involved. (c) How can data ethics and drug ethics save humanity at large in such a scenario?

There is a technological company named ABC Incorporated which is the second largest worldwide, situated in the Third World. You are the Chief Executive Officer and the majority shareholder of this company. The fast technological improvements have raised worries among environmental activists, regulatory authorities, and the general public over the sustainability of this scenario. You confront substantial issues about the business’s environmental footprint. In 2023, your organisation had a significant increase of 48% in greenhouse gas emissions compared to the levels recorded in 2019. The significant rise in energy consumption is mainly due to the surging energy requirements of your data centres, fuelled by the exponential expansion of Artificial Intelligence (AI). AI-powered services need much more computational resources and electrical energy compared to conventional online activities, notwithstanding their notable gains. The technology’s proliferation has led to a growing concern over the environmental repercussions, resulting in an increase in warnings. AI models, especially those used in extensive machine learning and data processing, exhibit much greater energy consumption than conventional computer tasks, with an Expansion vs Carbon exponential increase. Although there is already a commitment and goal to achieve net zero emissions by 2030, the challenge of lowering emissions seems overwhelming as the integration of AI continues to increase. To achieve this goal, substantial investments in renewable energy use would be necessary. The difficulty is exacerbated by the competitive environment of the technology sector, where rapid innovation is essential for preserving market standing and shareholders’ worth. To achieve a balance between innovation, profitability and sustainability, a strategic move is necessary that is in line with both business objectives and ethical obligations. (a) What is your immediate response to the challenges posed in the above case. (b) Discuss the ethical issues involved in the above case. (c) Your company has been identified to be penalised by technological giants. What logical and ethical arguments will you put forth to convince about its necessity. (d) Being a conscience being, what measures would you adopt to maintain balance between AI innovation and environmental footprint?

What do you understand by ‘moral integrity’ and ‘professional moral integrity and efficiency in the context of corporate governance in India? Illustrate with suitable examples.

3) Examine the ethical dilemma involved in the case. Prabhat was working as Vice President (Marketing) at Sterling Electric Ltd., a reputed multinational company. But presently the company was passing through the difficult times as the sales were continuously showing downward trend in the last two quarters. His division, which hitherto had been a major revenue contributor to the company’s financial health, was now desperately trying to procure some big government order for them. But their best efforts did not yield any positive success or breakthrough. His was a professional company and his local bosses were under Corporate Espionage pressure from their London-based HO to show some positive vs Family Financial results. In the last performance review meeting taken by the Executive Director (India Head), he was reprimanded for his poor performance. He assured them that his division is working on a special contract from the Ministry of Defence for a secret installation near Gwalior and tender is being submitted shortly. He was under extreme pressure and he was deeply perturbed. What aggravated the situation further was a warning from the top that if the deal is not clinched in favour of the company, his division might have to be closed and he may have to quit his lucrative job.

You have done MBA from a reputed institution three years back but could not get campus placement due to COVID-19 generated recession. However, after a lot of persuasion and series of competitive tests including written and interview, you managed to get a job in a leading shoe company. You have aged parents who are dependent and staying with you. You also recently got married after getting this decent job. You were allotted the Inspection Section which is responsible for clearing the final product. In first one appreciated for your performance by the management. The company is doing good business for last five years in domestic market and this year it is decided even to export to Europe and Gulf countries. However, one large consignment to Europe was rejected by their Inspecting Team due to certain poor quality and was sent back. The top management ordered that ibid consignment to be cleared for the domestic market. As a part of Inspecting Team, you observed the glaring poor quality and brought to the knowledge of the Team Commander. However, the top management advised all the members of the team to Fraud & Retaliatory overlook these defects as the management cannot bear such a huge loss. Rest of the team members except you promptly signed and cleared the consignment for domestic market, overlooking glaring defects. You again brought to the knowledge of the Team Commander that such consignment, if cleared even for domestic market, will tarnish the image and reputation of the company and will be counter-productive in the long run. However, you were further advised by the top management that if you do not clear the consignment, the company will not hesitate to terminate your services citing certain innocuous reasons. 1) Under the given conditions, what are the options available to you as a member of the Inspecting Team? 2) Critically evaluate each of the options listed by you. 3) What option would you adopt and why? 4) What are the ethical dilemmas being faced by you? 5) What can be the consequences of overlooking the observations raised by the Inspecting Team?

A Reputed food product company based in India developed a food product for international market and started exporting the same after getting necessary approvals. The company announced this achievement and also indicated that soon the product will be made available for the domestic consumers with almost same quality and health benefits. Accordingly, the company got its product approved by the domestic competent authority and launched the product in Indian market. The company could increase its market share over a period of time and earned substantial profit both domestically and internationally. However, the random sample test conducted by inspecting team found the product being sold domestically in variance with the approval obtained from the competent authority. On further investigation, it was also discovered that the food company was not only selling products which were not meeting the health standard of the country but also selling the rejected export products in the domestic market. This episode adversely affected the reputation and profitability of the food company. 1) What action do you visualize should be taken by the competent authority against the food company for violating the laid down domestic food standard and selling rejected export products in domestic market? 2) What course of action is available with the food company to resolve the crisis and bring back its lost reputation?

Parmal is a small but underdeveloped district. It has a rocky terrain that is not suitable for agriculture, though some subsistence agriculture is being done on small plots of land. The area receives adequate rainfall and has an irrigation canal flowing through it. Amria, its administrative centre, is a medium-sized town. It houses a large district hospital, an Industrial Training Institute and some privately owned skill training centres. It has all the facilities of a district headquarters. A trunk railway line passes approximately 50 kilometers from Amria. Its poor connectivity is a major reason for the absence of any major industry therein. The state government offers a In 2010 Anil, an industrialist decided to take benefits to set up Amria Plastic Works (APW) in Noora village, about 20km from Amria. While the factory was being built, Anil hired the required key labour and got them trained at the skill training centres at Amria. This act of his made the key personnel very loyal to APW. APW started production in 2011 with the labour drawn fully from Noora village. The villagers were very happy to get employment near their homes and were motivated by the key personnel to meet the production targets with high quality. APW started making large profits, a sizeable portion of which was used to improve the quality of life in Noora. By 2016, Noora could boast of a greener village and a renovated village temple. Anil liaised with the local MLA to increase the frequency of the bus services to Amria. The government also opened a primary health care centre and primary school at Noora in buildings constructed by APW. APW used its CSR funds to set up women’s self-help groups, subsidize primary education to the village children and procure an ambulance for use by its employeed and the needy. In 2019, there was a minor fire in APW. It was quickly extinguished as fire safety protocols were in place in the factory. Investigations revealed that the factory had been using electricity in excess of its authorized capacity. This was soon rectified. The next requirement of production fell for four months. Anil decided that all employees would be paid regularly. He employed them to plant trees and improve the village habitat. APW had developed a reputation of high-quality production and a motivated workforce. Critically analyse the story of APW and state the ethical issues involved. Do you consider APW as a role model for the development of backward areas? Give reasons.

In the light of the Satyam Scandal (2009), discuss the changes brought in corporate governance to ensure transparency, accountability.

negative impact on you (as CEO), the employees and the performance of the employees. Analyze the consequences of each of your suggested actions. One of the scientists working in the R & D laboratory of a major pharmaceutical company discovers that one of the company’s best selling veterinary drugs, B has the potential to cure a currently incurable liver disease that is prevalent in tribal areas. However, developing a variant of the drug suitable for human beings entailed a lot of research and development having a huge expenditure to the extent of 50 crores rupees. It was unlikely Spending vs Tribal that the company would recover the costs as the disease was rampant only in poverty-stricken area having very little market otherwise. If you were the CEO, then— (a) Identify the various actions that you could take; (b) Evaluate the pros and cons of each of your actions.