River Blindness

2844 Words Apr 4th, 2013 12 Pages
MERCK AND RIVER BLINDNESS

1. Think about the definition of stakeholders — any parties with a stake in the organization’s actions or performance. Who are the stakeholders in this situation? How many can you list? On what basis would you rank them in importance?

People suffering from the disease or those who potentially may be infected – would directly benefit from the cure
Merck employees at all levels – profitability and the economic health of the company affects current employees
Merck shareholders – inability to profit from the drug might have a negative effect on shareholder’s value, but taking the stand on “doing the right thing” might have a favorable effect on company’s reputation and increase the value of the stock
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Company’s decision could potentially have either positive or negative effect on employees’ morale. Allowing them to pursue the research could make them feel good about themselves and what they do for society.
The negatively impacted stockholders and the opportunity costs also have to be taken into account. If the company were to pursue the research, it would task its scientists to work on the project while forgoing an opportunity of developing a profitable product, stockholders would have to cope with potential decline of the firm’s long term profitability.
On the opposite side, Merck could greatly benefit from the opportunity of developing a drug to help get rid of a potentially deadly disease a cure for which was not existent at the time. Positive media attention could strengthen company’s reputation in the eyes of consumer and boost the sales on the existing product lines.

3. If a safe and effective drug could be developed, the prospect of Merck 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?

The responsibility of the executive management is to make decisions that are in the best interests of the corporation, regardless of the impact on its shareholders. They are

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