Anglo American PLC in South Africa: What do you do when cost reach epidemic propositions

QUESTION 1:
What are the pros and cons of Anglo Americans adoption of an aggressive strategy in combating HIV/AIDS among its South African workforce? What recommendations would you give the company concerning its HIV/AIDS policy?

Pros of Anglo Americans Adoption of Strategy

Anglo American became the trend setter for being the first private sector company to fight against HIV/AIDS. Many other MNEs like Coke, Ford, Colgate-Pamolive followed Anglo Americans initiative. This also helped in building their brand image. It got good response form WHO , Global Business Council for HIV / AIDS and other NGOs, thus making it as a socially responsible organization in Global business. The early adoption strategy helped it to prevent further loss in operating expenses by providing awareness and ART to its employee in earlier stage. It also prevented the possible higher loss to the company i.e. if in case the worker were left untreated then losses would have been higher than providing ART . Because of Anglo Americans aggressive strategy towards fighting HIV/AIDS in the long run they can benefit from the changing approach of government towards this issue

Cons of Anglo Americans Adoption of Strategy

The program as of now is NOT very effective, instead of a decrease in the number of workers having contracted HIV/AIDS, there is actually an increase of 2%. It faced the problems of spiraling costs of the program as the cost of distributing ART remained very high. It encountered outright opposition of the South African government and its political leaders as a result there is a possibility of loosing goodwill from South African government. The strategy requires workers to adhere to strict schedules but due to harsh working conditions workers find it difficult to adhere to the schedule i.e. 15% of people are there who are not adhering to the schedule.

Recommendations
As of now the company should avoid its present strategy and stop using its resources on it this will reduce the pressure from the government and other companies. The can pursue its humanitarian objectives considering the fact that South African government is going under change of heart i.e. National Strategic plan for combating HIV/AIDS. It should try to improve its work conditions and create a stable environment for its workforce as it will lead to greater adherence to the ART course and improve its operational efficiency. Workers who got benefitted from its programs can be asked to campaign for it and take the initiative further.

QUESTION 2:
Because such a large percentage of its workforce consists of migrant workers who are more likely to acquire and spread HIV/AIDS, should Anglo American adopt the policy of not hiring migrant workers? Should the South African government close the doors to migrant workers?

ANSWER 2:
The company has to keep certain points in mind while deciding upon any action in regard of migration workers.
The decision of the Anglo American company about recruiting the migrant workers should be in line with the host countries policy towards the migrant workers and the labor laws in the country. Any act of discrimination against migration works and curbing them from getting equal opportunities of employment may have a negative impact on the companys image. Stopping recruitment from migrant workers due to AIDS will also attract criticism from world organizations like WHO and will dent the image of the company on the global platform . The Government should try to discourage migration of workers by developing local skill set and creating policies that will encourage MNEs to hire locals over migrants. The government should allow migration of skilled labor if it is not able to generate the same in the home country so that the country remains attractive for MNEs.

QUESTION 3:
What role do pharmaceutical companies play in responding to the HIV/AIDS epidemic in South Africa? What policies or courses of action would you recommend to a company that produces HIV/AIDS drugs?

ANSWER 3:
Pharmaceutical companies play the following role in responding to HIV/AIDS epidemic in South Africa :

Since Pharmaceutical companies like GSK are able to sell at 1/10 of current market price ,other companies should also try to sell life saving drugs at the subsidized rate. As the government has now started the implementation of programs to control the spread of epidemic the companies must work in collaboration with the government this will help the pharmaceutical companies create a stronghold in the company.

The major concern for the pharmaceutical companies is about the lack of proper implementation of patent rights the companies can have dialogue with the govt. with respect to the same about the losses and remedial measures to protect the patent rights.

Recommendations
Measures to check diversion and re-distribution of drugs in western markets. Special packaging of non-profit drugs with separate and exclusive distribution channels can be used. Investment in Research and Development for alternative cheaper medicines for AIDS should be encouraged. The companies can invest in manufacturing in South Africa via licensing. This will ensure that there is no reverse engineering that is done on the drug and the patent will be active. Government of affected countries should be contacted to provide subsides on curative medicines of HIV/AIDS.

QUESTION 4:
Elsewhere in the chapter, we described the more aggressive policies of the Brazilian and Thai governments in the battle against HIV/AIDS. Should the South African government adopt a similarly aggressive approach? Why or why not?

ANSWER 4:
Brazil & Thailand have allowed local companies to make unlicensed generics taking advantage of TRIPS clause which allows them to avoid paying royalty on the drugs. This has led to a spiraling effect wherein price cuts have occurred in the rates of patented drugs as well leading to overall reduction of prices in the market. In South Africa GSK is already offering HIV/AIDS drugs at one-tenth of the current market price. Thus South Africa is already getting access to quality branded drugs at very less prices. The endeavor taken up by AA with GSK can promote other pharmaceutical MNEs to make FDI investments in the country and thus strengthen the fight against HIV/AIDS. If in case the situation in the country worsens it might need increased international aid and in case it follows aggressive policy it wont be able to avail it from other countries. Thus South Africa should not adopt the aggressive policies of Brazil and Thailand.

THANK YOU