Mr. Sharma was the All India Sales Head of a pharmaceutical company with a turnover of 400 crores. The company's main markets were small towns and tier 2 cities. Further, the company did a sizeable amount of business with state government hospitals and health centers. Mr. Sharma had given a lot of freedom to field sales agents to strike deals and negotiate prices with clients. This strategy worked well for the company. Recently Mr. Sharma received word that three company employees were selling products to government hospitals and health centers at a higher price than they were selling to other private hospitals and health centers. The employees were with the company for over five years and were good performers. A few sales staff informally raised the issue of the three getting relatively higher commissions because of their inflated deals. And this was creating a sense of unease among the sales staff. A cursory review of the account of the three showed that, in many instances, the government hospitals were paying more than other private institutions. Under procurement rules, the government is supposed to pay a fair price, one that other cost-conscious customers pay. In inquiry, Mr. Sharma found that the three were not alone; government purchases department officials were helping them scam the Department. Mr. Sharma realized that his sales staff and some corrupt government staff had been defrauding the state exchequer for quite some time. Mr. Sharma immediately reported it to his CEO, and the two discussed how to deal with the sales staff and whether to inform the government about the scam and the involvement of their staff. The issue was informing the government means that there was every possibility that they might be blacklisted, thereby losing a lot of business. Mr. Sharma and CEO were caught in a dilemma regarding how to proceed with the case. (a) What are the ethical and business issues involved in the case? (b) What are the options available to Mr. Sharma and the CEO? (c) Do you think the organizational culture of giving freedom to the sales force led to the issue or was the individual's corrupt nature that led to the problem? Discuss. (d) What ethics mechanisms and steps can the company create and implement to prevent unethical behavior, as mentioned in the case?

Answered by 3 toppers · CSE 2023–2024

Syllabus: Case Studies on above issues.