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Merck Case Study

In: Business and Management

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Merck & Costa Rica
Case Study

Rory S Smith
Ethics in Global Environment
State University of New York
Empire State College

Introduction Companies globally are often times scrutinize for their business practices. They face strong opposition and public humiliation when they conduct their business in an unethical way. When companies operate globally, they must ensure they are operating in a socially responsible manner. Being socially responsible is not just giving back to the local community but to be aware of any unforeseen threats that may affect the business. Many countries around the world do not have strict laws governing the preservation of their natural resources. Global companies see this to their advantage to reap the natural resources and leaving back not an ounce of guilt, for a country’s social and economic instability caused by their actions. Industries like manufacturing, pharmaceutical and oil refinery, many corporations contribute to the injustice of violating human rights and the environment. As the business world and economy evolves into a free market enterprise, many corporations continue to demonstrate poor business practices and it is becoming difficult to hold them liable for their actions. Many corporations are also being very silent about their unjust business practices and have many ways to cover up any reported abuse. Countries that experience environmental violations, should impose strict regulatory policies so that companies cannot cover up their abuse to the general public but reprimanded for not preventing them. In the Merck case study, it is evident that biodiversity has evolved to be a growing industry. However, due to rainforest being destroyed around the world, supply is scarce for many corporations like that of Merck to conduct their research initiatives. As such, countries like Costa Rica whose resources are rich in biodiversity will seek to prevent the destruction of their rainforest. Merck did a great job in offering an incentive to use the Costa Rican natural resources. It shows that the corporation was just not eager to make a profit but to give back to the community. The issue with this case is that the citizens were not informed on the decision between Merck and INBIO. INBIO, a private organization did its job in offering to protect the rainforest by contributing the funding paid by Merck, to the preservation of the rainforest but failed to properly communicate their decision to the general public.
Costa Rica Rain Forest Costa Rica rainforest is home to many species of different kind and host an ample amount of natural plants and herbs. The rainforest plays a significant role in the preservation of extinct species and also contributes to clean air in the environment. Rainforest coverage in Costa Rica accounts for 51% of the country’s landmass (rainforestmongobay.com, 2012). Costa Rica over the last couple years have lost approximately 0.8% of its rainforest coverage (rainforestmongobay.com, 2012).The rainforest is also home to many indigenous people.
Case Study Questions
From an ethical point of view who owns the species located in a forest? Who should benefit from the commercialization? The indigenous people of Costa Rica consist of eight different ethnic backgrounds (forestpeoples.org, 2013). They live deep in the rainforest and population stems to approximately 104,143 people in 2013 (forestpeoples.org, 2013). Such a number accumulates to 2.4 of the national population (forestpeople.org, 2013). Lot of the indigenous people reside in protected residency and villages while others are scattered throughout the rainforest. They utilize the herbs and different plant species for natural usage whether it be health or medical related (Travel Costa Rica, 2014).In having a understanding of the rainforest characteristics and features, it is fair to say from an ethical standpoint the people of the rainforest should have some legal obligation and ownership over the rainforest. It is their territory and their community environment. It is immensely unethical to destroy a person’s community especially when it is all they have and the resources in it is all they use. The government should also have a legal ownership for the land so they can stop international corporations that reap the benefits of the rainforest. Government should also provide legal support and understanding for the indigenous people rights. Indigenous people in Costa Rica have long been threaten for their lands and natural resources to be taken away (Travel Costa Rica.Nu, 2014).It is the government’s duties to instill protective rights and enforce those rights for this class of people. The Indigenous community rely heavily on agriculture and if their resources are destroyed they have nothing .They are not as educated as the general population of Costa Rica to understand certain legal actions or movements (Travel Costa Rica, 2014). Therefore, if commercialization should exist there is an urgency for the government to intervene and educate these people on the level in which they can understand. They should be able to benefit from any commercialization without any undue hazard that may prevent the social well-being of their dwellings. Commercialization can stem from economic and political reasoning, but it should demonstrate a level of responsibility for the rights of many.
Do pharmaceutical companies have any ethical obligation to share profits with the country in which they find a plant that leads them to create a profitable drug? Biodiversity can be a significant business driver for many economies and the pharmaceutical industry can greatly benefit from this. However, in order to have a sustainable business, efforts should be placed on implementing stringent policies that outline biodiversity and its relationship with the government of any country. Pharmaceutical companies have an ethical obligation to share any profit with the country they find any plant that may lead to a profitable drug. Many countries are blessed with natural resources than others and often times these countries may in fact be underdeveloped nations whose economy needs a driving force. If companies wish to extract plants for medical research they should initiate to offer a profit or a percentage to the government. Pharmaceutical companies that reap the benefits of natural resources in a country and causes a negative impact on the economic and social welfare of the community should be penalized. It can also cause a political turmoil amongst different classes in a country for the failure of the government to protect the country’s right. Offering a percentage to the government can assist in other vital areas of development the country needs improvement on such as road and infrastructure, providing suitable health facilities, proper housing development and most importantly preservation of the country’s national park. In an article by the guardian which addressed the sustainability of biodiversity business, it stated that all companies affect the ecosystems in some way (The Guardian, 2010).These companies are dependent on functioning ecosystems to remain in business (The Guardian, 2010). In order to remain in business, the article outlined a policy that was introduced by Nagoya (Cbd.int/2015). It provided insights from a business stance on public policy and the impact it has on biodiversity and the ecosystem (The guardian, 2010).If pharmaceutical companies perform better business practices they not only preserve the eco system. But can also assist in the development of drugs that can fight diseases and the economic boost provided to many countries by paying a percentage of their profitable earnings. While there are certain rules and regulations governing the preservation of the environment such as the Convention on Biological Diversity; which is a multilateral environmental agreement launched at the 1992 United Nations Conference on Environment and Development in Rio de Janeiro (Cbd.int/2015). There are not much laws that requires pharmaceutical companies to pay a country for their natural resources, so laws must be enacted to encourage this.
Do you think that the agreement between Merck and INBio was ethically justifiable? What is different about the case of Merck and INBio is that both organizations had a vision and they establish a mutual agreement which in fact benefits them both. Inbio, was primary focused on conservation, while Merck was focused on researching biodiversity. The agreement between the two was justifiable, there was no illegal business practices that took place and both organization did what they deem was ethically justifiable. Merck paid for the resources and INbio in turns used that money to assist with the preservation of parks. While it may seem unjust that the general public was not informed or included on the decision. There are many factors which could have caused this not to happen. Some of which can be lack of understanding in the legal stance on the issue, involvement of too much groups can create confusion and chaos to come to a business agreement. In the end the agreement has benefited Costa Rica in many ways.
It has provided the country to receive a large portion of sum from commercialization, which can assist with the up keeping of its park, which means less money for the government to spend. It also provides a sense of education, whereas Costa Rican scientists are influence to research herbs and plants to treat local disease that may plague the community. A 2014 article by global exchange.org compiled a list of top 10 criminal activities by companies (Global Exchange.org, 2014). The article provided examples with companies such as Bayer, Gap, and Glencore just to name a few , that do not provide adequate working conditions, obtain corporate seizures of indigenous lands, and contaminate the environment (Global Exchange.Org, 2014). Amnesty International outlined how Chevron Corporation fuel has done poor business activities that affects the well-being of the Ecuadorian citizens. The company has destroyed Indigenous communities by cutting down the amazon rainforest in search of petroleum resources (AmnestyUSA.Org, 2015).Any ancestral lands and natural resources used by citizens in the country is gone and the government is doing very little to amend the issue. (AmnestyUSA.Org, 2015). With looking at these cases, it is once again reasonable to say that the Merck and Inbio agreement may not have been done in the best way possible to please everyone. However, it was done in a way where it did not destroy the living habitat of indigenous people.
Conclusion
The Merck case study exemplified the importance for firms to be ethical in their business practices, and the need to communicate effectively any issue. Corporations must ensure they are actively working on endorsing a good fair trade and should pressure companies that violate the human and environmental rights. Companies should be held accountable for their unjust business practices in failure to preserve the natural resources of the environment, and destroying the lives of many people who rely on these resources. The government can play a significant role in this movement by instilling strict regulatory laws that govern international corporations to use their resources and fines for those that do not follow the guidelines. The government should also protect its people and its habitat by educating them on their rights and legal stance. Corporations like that of Merck should also be aware of their business and offer to pay for a country’s natural resources, especially if it is used for research and development of a profitable resource. In the end, being ethical is the best way for a company to stay in business. As hard as it may seem, it offers a preventive strategy for corporations not to be accuse of abusing environmental rights. It further eliminates any poor business partnerships and enhances ethical values which will be appreciated by the general public.

REFERENCES

Griffith, J. (n.d.). Biodiversity should be a top priority for businesses. Retrieved April 10, 2015, from http://www.theguardian.com/sustainable-business/biodiversity-business-government-conservation-cbd

Mongabay, R. (n.d.). Costa Rica Forest Information and Data. Retrieved April 10, 2015, from http://rainforests.mongabay.com/deforestation/2000/Costa_Rica.htm

Indigenous Peoples in Costa Rica. (n.d.). Retrieved April 10, 2015, from http://www.travelcostarica.nu/indigenous-costa-rica

Global Exchange Top Ten Corporate Criminals List | Global Exchange. (n.d.). Retrieved April 10, 2015, from http://www.globalexchange.org/corporateHRviolators#FIFA

International, A. (n.d.). Chevron Corp. Retrieved April 10, 2015, from http://www.amnestyusa.org/our-work/issues/business-and-human-rights/oil-gas-and-mining-industries/chevron-corp

Global Biodiversity Outlook 4 - reports on status and trends of biodiversity and actions in support of further implementation of the Convention Read More. (n.d.). Retrieved April 10, 2015, from http://www.cbd.int/

People, F. (n.d.). Costa Rica: Indigenous peoples suffer violent attacks for demanding recognition of their land rights. Retrieved April 10, 2015, from http://www.forestpeoples.org/topics/rights-land-natural-resources/news/2013/02/costa-rica-indigenous-peoples-suffer-violent-attack

Marzulla, R. (n.d.). The Biodiversity Treaty Challenges Intellectual Property Rights. Retrieved April 10, 2015, from http://www.fed-soc.org/publications/detail/the-biodiversity-treaty-challenges-intellectual-property-rights

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