ANGLO AMERICAN PLC IN SOUTH AFRICA

What Do You Do When Costs Reach Epidemic Proportions?

By:-Avaneesh Kumar Srivastava

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ABOUT THE CASE:Anglo American African investment HIV problems with workers Company initiative to protect them Cost of operations of ART gone on beyond Roll backing from ART Critics

Discuss something about HIV:-HIV.docx

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Q1. 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:

It became a trend setter for other major companies operating in South Africa, thus gaining a goodwill among other companies , which can be helpful in partnering with other major companies not only in South Africa but also in other part of the world . 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 were left untreated then losses would have been higher than providing ART . the worker

Excellent corporate social responsibility initiatives were displayed by AA by not only taking preventive measures but also conducting care and wellness programs extending up to the employees and their families.

CONS:

The cost of the program is spiraling because the cost of distribution of the necessary drugs remains high and the estimated cost of $4000 per year per employee is also high compared to the average monthly wages of $830. The South African government was not very appreciative of Anglo American PLCs efforts to combat HIV/AIDS in South Africa. As a result, Anglo American PLC stands the chance of losing the good will of the South African government. In spite of spending so much money on the program, Anglo American PLC suffers from about 15% people who are not adhering to the program. The treatment regimen is such that it needs works to adhere to strict schedules. However due to harsh working conditions workers find it difficult to adhere to the schedules.

RECOMMENDATIONS:-

The company should stop persisting with its existing policy and avoid further wastage of money and resources. The pressure would reduce a little bit from the government and other MNEs which are constantly criticizing the company. The company can pursue its humanitarian objectives in the future considering the fact that the South African government is seemingly undergoing a change of heart. This decision should be effectively conveyed to the company shareholders and the global clients of the company to manage the international image of the company.

Q2. 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 GOVT. CLOSE THE DOORS TO MIGRANT WORKERS?

Not hiring migrant workers would be a strategic mistake as about four fifths of the workforce is migrant labor. Since the company already is suffering from workforce absenteeism and such health related ills, such a move regarding migrant labor would affect the productivity. Not hiring migrants in this case would not serve any purpose South African government would lose its attractiveness as a labor availability country if it closes the doors to the migrants.

Q3. 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?

Pharmaceutical companies play the following role in responding to the HIV/AIDS epidemic in South Africa.

Since pharmaceutical companies like GSK are able to sell at 1/10 the current market price, other pharmaceutical companies should also be able to sell life saving medicines at a subsidized rate. As the government has now started the implementation of various programs to control the spread of the epidemic, the pharmaceutical companies must work in collaboration with the government. This will help the pharmaceutical companies create a stronghold in the country. The major concern that the pharmaceutical companies have is about the lack of proper implementation of patent rights .The pharmaceutical companies can have a dialogue with the South African government whereby they can explain the government about the losses that they incur and remedial measures that can be undertaken to protect patent rights.

The policies or courses of action which we would recommend to a company that produces HIV/AIDS drugs

The company can invest more into R & D so that newer life saving drugs can be manufactured because as there are not many medicines available in this area a small break through might have a strong impact in enhancing companys image and operations. The company can sell HIV/AIDS related medicines at a subsidized rate there by creating a good will among the countrys government and the society and also as a part of CSR activity.

Q4:- ELSEWHERE IN THE CHAPTER, WE DESCRIBED THE MORE AGGRESSIVE POLICIES OF BRAZILIAN AND THAI GOVERNMENT IN THE BATTLE AGAINST HIV/AIDS. SHOULD THE SOUTH AFRICAN GOVERNMENT ADOPT A SIMILARLY AGGRESSIVE APPROACH? WHY OR WHY NOT?
Though, Brazil and Thailand faced similar problem of epidemic like spread of HIV/AIDS, there were various differences in their political, legal, cultural and economic conditions. Let us first understand their steps and then reach to a logical connect and accordingly decide if South Africa can adopt some of the steps that were undertaken at other countries like Brazil and Thailand. Brazil and Thailand have permitted local companies to make unlicensed generics taking advantage of TRIPS clause which allows them to avoid paying royalty on the drugs. This has lead 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 GlaxoSmithKline is already offering HIV/AIDS drugs at one-tenth of a market price.
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Thus, South Africa is already getting access to top quality branded drugs at very less prices. The Endeavour taken up by AA together with GlaxoSmithKline can promote other pharmaceutical MNEs to make FDI investments in the country and thus strengthen the fight against HIV/AIDS. Also, in case the situation worsens in the country it might need increased international aid and in case it follows an aggressive policy, it wont be able to avail of it from other countries. Thus, South Africa should not resort to the aggressive policies of Brazil and Thailand.

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