Discussion
How should a for-profit corporation balance its business needs with the needs of its customers?
In a for-profit business the main goal is typically to make money selling a product and then, where possible and profitable, expand into new markets and make even more money. To do this, an organization must have customers. Having said that there needs to be a balance between the company's needs and the customer's needs.
Philippians 2:4 (English Standard Version) states, "let each of you look not only to his own interests, but also to the interests of others." Should they ignore their customers then the customers will likely jump ship and move to another company that is willing to listen to them. Companies must start thinking of customer value strategically by recognizing that every point of interaction with the customer affect the perception of value and the company's ability to deliver superior value (McFarlane, 2013).
Thinking this way should prompt companies to focus on customer satisfaction first and then towards growth once the customer base is established. With the guidance of scripture and through faith and prayer Christian business owners can expect this to grow their business as well. Jeremiah 29:11 (New International Version) reminds us, "For I know the plans I have for you, plans to prosper you and not to harm you, plans to give you hope and a future." While this scripture is often applied to personal growth and advancement, I feel it is applicable to business dealings as well.
Do companies whose mission is primarily to create products on which lives depend have a greater responsibility to tip the balance toward the consumer more than toward themselves?
Pharmaceutical companies are among the most well-known companies that manufacture products that are vital to the health and welfare of the human populace. Some pharmaceutical companies even have patents on chemical formulas that make them the one and only supplier for that specific drug.
This puts these companies in the spotlight more often than other companies. This is very similar to how credit bureaus and credit card companies are under more scrutiny when it comes to protecting personal information versus those companies that do not deal primarily with privacy act information.
For this reason, I believe that these drug companies have an ethical or moral obligation to tip the balance toward the consumer instead of themselves. Knowing that it is the sole manufacturer of a lifesaving medicine should lead a moral business owner to provide it at a price that most people can afford.
This is often not the case however as has been recently seen when Mylan, one of the sole providers of Epinephrine injectors, decided to raise the price of the EpiPen 200% over just 2 years. This enraged people so much that racketeering charges were brought up against the company. On September 21, 2016, the House Committee on Oversight and Government Reform held hearings at which Mylan's Chief Executive defended her company's price increases (Cohen, 2016).
The price hikes were defended by showing market research showing the market would bear the price, and that a cheaper alternative was in production and would be on the market soon. While the company was within it rights to do this, it left many people unable to purchase the pens even with insurance covering part of the cost.
This could have led to both kids and adults not having access to the lifesaving medicine. I think we can all agree that this is ethically wrong. Legally though, companies have a right to charge whatever they want for the products that people are willing to purchase or what the market may bear. Perhaps this will change one day in the future.
If you were running such a company, looking through the lens of a Biblical worldview, how would you respond?
As a Christian and using a biblical world view I would have some serious reservations about setting prices so high as to keep them out of the reach of most individuals. Paul reminds us in 1 Corinthians 10:23 (English Standard Version) that, "All things are lawful, but not all things are helpful.
All things are lawful, but not all things build up." Even thought the Supreme Court of the United States has upheld the right of companies to pay to maintain their monopolies (Grouse, 2014), and thus charge higher prices due to the lack of competition, does not mean that I would keep the price so high to maximize profits.
If presented with proof that the product I was manufacturing was out of range of most people and was the only one available to them I would do everything in my power to bring the price down to a reasonable level without sacrificing at least a minimal profit. Even though I want to turn a profit and I do have employees to pay and overhead costs to contend with I think 800%+ mark-up over manufacturing price is obscene.
References
Cohen, S.S. (2016). Soaring prescription drug prices. Policy, Politics, & Nursing Practice, 17(3), 115-117.
Grouse, L. (2014). Cost-effective medicine vs. the medical-industrial complex. Journal of Thoracic Disease, 6(9), 203-206.
McFarlane, D.A. (2013). The strategic importance of customer value. Atlantic Marketing Journal, 2(1), 62-75.
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Intellectual Property Rights
Discussion Board
Corporate Balance of Business and Consumer Needs
It is essential for companies to constantly be progressing and continue process improvement, those that remain stagnant, may succumb to an ever changing world.
Customer relationship management (CRM) is a strategy used in which customer and corporate needs are balanced. By evaluating and addressing any deficiencies in the five dimensions of service between expectations and reality by both the customer and internal components, a company's service quality could be improved dramatically (Wang, 2008). The five dimensions include:
tangibles - the appearance of the physical facilities, personnel and communication channels; reliability - the ability to provide accurate and dependable service; responsiveness - willingness to assist customers at a speedy and efficient manner; assurance - features that convey trust and confidence; and empathy - readiness to provide each customer with individualized attention and personalized service (Wang, 2008, p. 6).
In turn, corporate profits have a higher likelihood to increase, as well as, customer satisfaction.
Creator v. Consumer in the Creation and Management of Intellectual Property
Finding the balance between pleasing the customer, while still turning a profit is a constant struggle for companies. Ethical practices and Christian application may be put to the wayside in order to please the stakeholders.
In the instance with intellectual property (IP) laws, they may be used to protect other companies from "stealing" ideas and create a stronghold in the marketplace, but one could argue that is can dampen innovation.
Romans 12:17-21 17 gives the example of fair business practices, and to do what is right, not just by the stakeholders, but consumers as well.
Do not repay anyone evil for evil. Be careful to do what is right in the eyes of everyone. If it is possible, as far as it depends on you, live at peace with everyone.
Do not take revenge, my dear friends, but leave room for God's wrath, for it is written: "It is mine to avenge; I will repay," says the LORD. On the contrary: "If your enemy is hungry, feed him; if he is thirsty, give him something to drink. In doing this, you will heap burning coals on his head." Do not be overcome by evil, but overcome evil with good.
Profit and Return on Investment for Company Owners/Shareholders
While some may say unconventional, the free patent release approach have been explored by companies in hopes of encouraging innovation (Ziegler, Gassmann, & Friesike, 2014).
From an IP strategy perspective, opening up the innovation process means also to consider using IP, and especially patents, as a means to exchange and share knowledge. Extant literature on open innovation emphasizes that IP should be considered as an enabler of open innovation instead of a disabler (Ziegler, Gassmann, & Friesike, 2014, p. 19)
With the patent release, it encourages economic growth, but also social responsibility. Companies that are acknowledged for their IP sharing are viewed more positively and greater chance to enhance their corporate reputation among other firms and the general public (Ziegler, Gassmann, & Friesike, 2014).
Social Responsibility of Protecting Lives
IP laws protect from infringement on trademarks, patents and copyrights. Though the intent behind is to protect those that have created or developed a unique product or idea, the vagueness of all that is protected is under scrutiny, some claiming too difficult to innovate with the fear a product or idea is too similar to competitors (Kubasek, Browne, Barkacs, Herron, & Dhooge, 2016).
Mylan found itself in hot water when it raised the price of life saving EpiPen by 400%. The makers cited material cost increase and investment on operational research were the contributing factors.
A public outcry was heard around the country. Mylan has essential monopolized the epinephrine distribution device market. While nearly impossible to put a price on a life, some families were forced to choose between the life saving device or putting food on the table.
A drug company such as Mylan, must find the balance of still pleasing shareholders, but also providing medical devices that are affordable for individuals. The price hike has even garnered the attention of Congress, raising the question of the ethical and lawful acts of pharmaceutical pricing (Lyon, 2016).
Patent design of the product is what prevents other companies from replicating ideas in the autoinjector epinephrine market place. The usage of an unexposed needle and simple procedural design, allows users for quick and relatively easy administering. In contrast, EpiPens main (former) competitor, the Twinject, is a little more complex in administering the drug.
The exposed needle and two cap design may take away valuable seconds in a life threating situation (Guerlain, Hugine, & Wang, 2010). In a study conducted with 48 individuals of various ages, genders and background knowledge, were given 1 hour to read the instructions for 4 epinephrine autoinjection devices, 2 were prototypes, 1 EpiPen and 1 Twinject.
One of the prototypes provided a voice prompt system as to what to do in an anaphylaxis situation, with step by step instructions given, the success rate was far greater than any of the other 3. If a patent was to be provided for this type of instruction, it may limit the effectiveness of other lifesaving devices.
Finding the Balance Between Pleasing Stakeholders but Garnering a Consumer Following to Continuing Existence of the Company
Various studies conducted have concluded it is far less expensive and labor intensive to maintain positive customer relationships, vice seeking new customers. The use of the 80-20 rule
recognizes that approximately 80% of profits come from 20% of the top customers (Kotler & Keller, 2016). The thought process of a consumer was studied and was able to conclude that even if a product was more expensive, a previous positive experience will increase the likelihood of a repeat purchase (Yoon, 2009).
Positive brand recognition may influence a buyer's choice to initially go with a product, but an overall satisfactory experience will encourage a customer loyalty.
An example of garnering a vast group of loyal customers is the outdoor equipment and apparel company, Patagonia. Patagonia prides itself on ethical practices that cause no undo harm on the environment, while still creating a product that is of high quality and yet still fashionable.
While sticking to its core ethics, the approach appeals to both stakeholders and customers. The progressive movement to protect the environment and still hear out the needs of the customer have led to a large profit margin and continuous growth (Patagonia's Mission Statement, n.d.).
Biblical Integration Importance While Running a Company
Matthew 11:28-30 28 shows the compassion in which a company should show, especially if the company produces lifesaving devices. Though a company relies on profits, that should not be the only motivating factor.
Come to me, all you who are weary and burdened, and I will give you rest. Take my yoke upon you and learn from me, for I am gentle and humble in heart, and you will find rest for your souls. For my yoke is easy and my burden is light (NIV).
Relevant Law for Protecting Intellectual Property of the Company
In conjunction with 18 U.S. Code § 1832, 15 U.S.C. § 1125, and 17 U.S.C. §101, offers protection of intellectual property of trade secrets, copyrights and trademarks to ideas, concepts and products.
Needs of Patients, Practitioners, And Society
The author, Pray, investigated the effects of Intellectual Property Rights (IPR), more specifically the potential of an infringement with developing countries.
Growth and innovation may be limited if ideas and research may not be shared (2005). The enticement of highly skilled workers could happen if there is substantial economic growth, as well as, the likelihood of further funding for research. IPRs may affect the way idea sharing or research is conducted, but given the opportunity, advancements and economic growth can occur, especially in developing nations.